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86–217 PDF 2003

S. HRG. 107–927

DROUGHT CONDITIONS

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

AUGUST 20, 2002

Printed for the use of the

Committee on Agriculture, Nutrition, and Forestry

(

Available via the World Wide Web: http://www.agriculture.senate.gov

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont

KENT CONRAD, North Dakota

THOMAS A. DASCHLE, South Dakota

MAX BAUCUS, Montana

BLANCHE L. LINCOLN, Arkansas

ZELL MILLER, Georgia

DEBBIE A. STABENOW, Michigan

BEN NELSON, Nebraska

MARK DAYTON, Minnesota

PAUL DAVID WELLSTONE, Minnesota

RICHARD G. LUGAR, Indiana

JESSE HELMS, North Carolina

THAD COCHRAN, Mississippi

MITCH MCCONNELL, Kentucky

PAT ROBERTS, Kansas

PETER G. FITZGERALD, Illinois

CRAIG THOMAS, Wyoming

WAYNE ALLARD, Colorado

TIM HUTCHINSON, Arkansas

MICHEAL D. CRAPO, Idaho

MARK HALVERSON, Staff Director/Chief Counsel

DAVID L. JOHNSON, Chief Counsel for the Minority

ROBERT E. STURM, Chief Clerk

KEITH LUSE, Staff Director for the Minority

(II)

(III)

C O N T E N T S

Page

HEARING(S):

Drought Conditions ................................................................................................. 01

Tuesday, August 20, 2002

STATEMENTS PRESENTED BY SENATORS

Nelson, Hon. Ben, a U.S. Senator from Nebraska ................................................ 01

WITNESSES

Panel I

Carlson, Merlyn, Director, Nebraska Department of Agriculture ....................... 08

Chick, Stephen K., State Conservationist, USDA-Natural Resources

Conservation Service ........................................................................................... 04

Davis, Rebecca, Director of the Topeka Regional Office, Risk Management

Agency, U.S. Department of Agriculture ........................................................... 11

France, Susan, Division Manager of Water Administration, State Department

of Natural Resources ............................................................................................ 10

Wolford, Brian, State Executive Director, Nebraska Farm Service Agency ....... 06

Panel II

Batie, Don, Farmer, Dawson County, Nebraska; on behalf of the Nebraska

Farm Bureau ........................................................................................................ 15

Bruntz, David, Past President, Nebraska Cattlemen, Inc. .................................. 19

Hansen, John K., President, Nebraska Farmers Union, Lincoln, Nebraska ...... 17

Philippi, Joy M., Board Member, National Pork Producers Council ................... 21

Panel III

Dittrich, Keith J., President, American Corn Growers Association .................... 28

Klein, Lee, Immediate Past President, National Corn Growers Association ...... 31

Schweers, Mark, President, American Corn Growers Association ...................... 26

Stoddard, Ron, Executive Director, Nebraska Wheat Board ............................... 30

Vonderstrasse, James, Vice President for Legislation, National Grain

Sorghum Producers .............................................................................................. 25

Panel IV

Cacek, Ron, Manager, North Platte Natural Resources District, and

Chairman, Natural Resources District Managers Committee ......................... 40

Davis, Al, Rancher, Hyannis, Nebraska ................................................................ 42

Dueland, Dale, Farmer, McCook, Nebraska .......................................................... 36

Duvall, Arthur, Soybean Grower, on behalf of Nebraska Soybean Association,

Ord, Nebraska ...................................................................................................... 47

Kerkman, Jeremie, on behalf of the Central Nebraska Public Power and

Irrigation District ................................................................................................. 39

Page

IV

Steinman, Vern, OGT Volunteer Manager, Operation Hay and Grain Lift,

Norfolk, Nebraska ................................................................................................ 45

APPENDIX

PREPARED STATEMENTS:

Harkin, Hon. Tom ............................................................................................ 58

Batie, Don ......................................................................................................... 77

Bruntz, David ................................................................................................... 90

Cacek, Ron ........................................................................................................ 143

Carlson, Merlyn ................................................................................................ 68

Chick, Stephen K. ............................................................................................. 59

Davis, Al ............................................................................................................ 150

Davis, Rebecca .................................................................................................. 74

Dittrich, Keith, J. ............................................................................................. 109

Dueland, Dale ................................................................................................... 131

Duvall, Arthur .................................................................................................. 168

France, Susan ................................................................................................... 73

Hagel, Hon. Chuck ........................................................................................... 66

Hansen, John K. ............................................................................................... 88

Kerkman, Jeremie ............................................................................................ 136

Letters of Pam Potthoff, a member of the U.S. Custom Harvesters ............ 121

Phillippi, Joy M. ............................................................................................... 96

Schweers, Mark ................................................................................................ 107

Steinman, Vern ................................................................................................. 159

Stoddard, Ron ................................................................................................... 117

Vonderstrasse, James ....................................................................................... 104

Wolford, Brian .................................................................................................. 62

(1)

HEARING ON DROUGHT CONDITIONS

TUESDAY, AUGUST 20, 2002

U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC

The committee met, pursuant to notice, at 2 p.m., College Park,

Hornady/Marshall Auditorium, 3180 West Highway 34, Grand Island, Nebraska, Hon. E. Benjamin Nelson presiding.

Present: Senator Nelson.

STATEMENT OF HON. E. BENJAMIN NELSON, A U.S. SENATOR

FROM NEBRASKA

Senator NELSON. Good afternoon, everyone.

This hearing of the Senate Committee on Agriculture and Nutrition and Forestry is now called to order.

The Committee has convened this hearing to discuss the devastating drought that has afflicted the Great Plains and most

States west of the Missouri River. I would like to thank all of the

panel members who are here today and members of the audience

who are here for attending this important hearing about the most

widespread drought since the Dust Bowl years of the Great Depression.

Whether you read this morning’s World Herald, where you see

that water is off from running irrigators or you are experiencing it

directly yourself, there is no question that this drought is truly a

record-breaking drought and is causing heartbreaking losses for

producers.

Even worse, this is the third drought in a row in many regions

causing producers to go into further debt instead of being able to

recover from the previous losses. As you can see from the maps

that we have been able to put up here for visual purposes, the

drought has steadily consumed Nebraska. It is expanding from the

Western States now to Iowa, and this illustrates just how dire a

situation we are facing.

In Nebraska, the drought has had a severe impact on the livestock producers, especially cow/calf operators, as is true in many

neighboring States.

In its most recent crop progress report, USDA found that 91 percent of Nebraska’s pastures are either in poor or very poor conditions. The combination of a very mild and dry winter, plus the

drought, has resulted in very little grass growth in pastures and

rangeland forcing ranchers to take the cattle off and spend a fortune to either move them to feed sources or move feed sources to

2

them. In addition, many producers have culled their herds, and

more expect to, selling them into an already depressed market.

I have already heard many stories about how producers are suffering. We all have. One rancher from Valentine said that he estimated he would spend $90,000 to ship 600 cattle 250 miles away

for 5 months so that they can feed on cornstalks. He expected at

that cost, plus the money he would pay for hay he is having

shipped from Wisconsin, it would completely wipe out his profits

for this year.

Another constituent from Custer County wrote to me recently

saying that for the first time ever he was forced to sell 50 cow/calf

pairs over the last 3 months from in cow herd of 450 head. He said

that he had approximately $49,000 in added expenses so far this

year from renting additional pasture, purchasing hay, weaning

calves early, and transporting cattle to the feedlot. I have heard

about how the worst has come to many ranchers who are having

to sell their entire herds, ending a business that had been in the

family for numerous generations.

In addition to these stories, the cattle producers, in general, have

faced additional costs due to grasshopper infestations covering vast

areas of rangeland and cropland. None of these costs would have

been incurred had Nebraska received normal precipitation in the

last few years.

Crop producers around the country are also facing tough times.

In many areas of Nebraska, dryland crops will yield absolutely

nothing. According to USDA’s August estimates, Nebraska’s 2002

corn crop is likely to be only 919 million bushels, at least 20 percent below recent production levels.

Irrigated crops are faring better, but the lack of rainfall has reduced the water available. Constituents are telling me that their

pumping costs have almost doubled from past years, not because

of the cost of fuel, but the need for longer pumping hours.

These circumstances make it crystal clear that our farmers and

ranchers need help, and that is why the Senate Agriculture Committee has convened this field hearing as we discuss the drought

and what to do in response. Much has been said recently about

funding drought relief assistance by taking money away from programs in the new Farm bill.

If that means taking money away from programs that won’t be

paying out this year, like loan deficiency payments, I am willing to

consider it, but if it means taking away money from programs that

producers do use and are looking forward to utilizing, like programs funding agriculture technology services, I am dead set

against it.

When people talk about these kinds of offsets from the Farm bill,

it is necessary to keep a few things in mind.

They need to remember that when we have had little carry-over

moisture from the previous year, when we have had a bone dry

winter, when we have had only a quarter inch of rain in June, a

quarter inch in July, and a quarter inch in August, we are not just

having bad weather; we are suffering from a natural disaster. That

is the point.

This drought that we are experiencing is a natural disaster, the

kind that has not happened since the Dust Bowl. What folks in

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Washington must be made to understand is that we need to treat

it like we have treated every other natural disaster.

When Florida gets a hurricane, for example, Congress sends out

disaster relief. When California gets an earthquake, Congress

sends out disaster relief. It is only common sense then that when

the country has a recordbreaking drought, Congress should pass

disaster relief.

That is why I am cosponsoring Senate bill 2800 that has had

four cosponsors, bipartisan in nature. It had four cosponsors when

it was introduced on July 25, but now has 17 cosponsors on a bipartisan basis. This bill would provide disaster assistance needed

to cover crop and livestock losses in both 2001 and 2002.

With the information that will be provided in this hearing, I hope

that I can provide some perspective to those among my Senate colleagues who are thinking about funding relief through offsets that

will hurt farmers, and I hope the concerns raised by the members

of the panels and the producers in the audience today will help

make the case that we need to treat this natural disaster like a

natural disaster.

Like any other natural disaster, this drought has hurt the very

livelihoods of good, hardworking people who struggle every day to

stay afloat even under normal conditions.

Our testimony today will be divided into four parts. The first

panel is comprised of Federal and State officials to provide a brief

overview of the drought for all as a background. The second panel

is made up of agriculture and commodity organizations to describe

the impact that the drought has had on their membership. The

final panel, a large panel that will be divided into two parts, is a

producer/operator panel that will describe how the drought has

caused shortages of both available land and available water and

will describe what needs to be done to provide some help.

Finally, if time permits—and we hope that it will—we will take

a few questions from the audience. If you have questions, please

put your name and address on some index cards that are provided

so that the record can reflect your concerns, and hopefully we can

answer your questions from the podium.

In the interest of providing every panel member an opportunity

to speak, I would ask that you would limit your spoken testimony

to no more than 5 minutes, and to make sure that you do, Betsy

is going to keep a timer to help enforce that in a friendly way, to

make sure that we are able to get as much testimony as possible.

Now, any written testimony can be submitted to the court reporter

to become part of the record.

Let me thank you all for being here today, and a very special

thank you to the chairman of this committee. I want to say that

Chairman Harkin has clearly understood why we need to have this

hearing. He has submitted a letter, which we will add to the record

in support of what we are doing here today. I thank you personally

on behalf of him.

[The prepared statement of Senator Harkin can be found in the

appendix on page 58.]

Senator NELSON. Then we have some representatives for our congressional delegation. Janice Nygren—Jamie, excuse me. Jamie

Nygren. I know better. Jamie, identify yourself, from Senator

4

Hagel’s office—there he is. Jamie, if you had been a little closer,

I would have known it was not Janice. I won’t do that again, we

have Adam Olson from Congressman Bereuter’s office. There he is.

We have Bruce Riker from Congressman Osborne’s office. We are

glad to have you here as well, Bruce.

That is all the information we have to provide at the moment.

Now we turn to the panel, and the first panel member is Steve

Chick. Steve, we thank you. He will be here representing—as a

State conservationist from the Natural Resources Conservation

Service that showed me yesterday some very concrete examples of

how the EQIP program is helping guard against erosion in southeast Nebraska. I appreciate that very much. Steve, we are anxious

to get your remarks.

STATEMENT OF STEPHEN K. CHICK, STATE

CONSERVATIONIST, USDA-NATURAL RESOURCES

CONSERVATION SERVICE

Mr. CHICK. Thank you, Senator Nelson, and thank you for taking

the time yesterday to visit us in the field.

It is a privilege for me to be requested to provide testimony regarding actions taken by the Natural Resources Conservation Service to deal with the drought in Nebraska. My testimony will provide information about three main issues regarding the drought.

The first one will be my perspective on the magnitude and the

severity of the drought problem in Nebraska. Second, I will talk

about the importance of the Environmental Quality Incentives Program for long-term drought prevention. Third, I will talk about

NRCS’ immediate actions in the short term to deal with the current drought.

Let me begin with my perspective on the magnitude and severity

of the drought problem in Nebraska. It is an understatement for

me to say that Nebraska’s farmers and ranchers are facing a very

serious drought this year.

In July I traveled to north central Nebraska near Ord and toured

Rick Welniack’s and Joe Navotny’s farming operations. In one case

I saw a nearly dormant pasture, which was the first pasture of a

full year rotational grazing system, and yet the cattle were returning to that pasture in early July. Joe Navotny commented, ‘‘The

cattle will probably beat me back to the gate when I turn them

loose in here.’’

I saw Rick Welniack’s quarter section of irrigated alfalfa, which

is supposed to be a cash crop this year, but instead will be used

on the farm for winter feed. Rick had sprayed for grasshoppers

three times, but the grasshoppers kept coming in waves wreaking

further damage on the already stinted dryland corn crop.

Two weeks ago I traveled to Perkins, Chase, Dundy, and Hitchcock Counties in southwestern Nebraska. The trip underscored for

me the difficult conditions in that area. I specifically visited Pam

and Harold Potthoff’s farm near Stratton. Pam is the Nebraska

president of the Women in Farm Economics and serves on our

State Technical Committee. I saw their 300 acres of dryland corn,

and it was just wilted right to the ground. We were only able to

find one 6-inch nub of an ear of corn.

5

As we drove south of Stratton with the Potthoffs, we saw field

after field experiencing similar problems. Yes, the drought is severe

in Nebraska.

Let me turn now to the importance of the Environmental Quality

Incentives Program for long-term drought prevention.

Time and time again, farmers and ranchers have expressed to

me that they are so much better off than some of their neighbors

because of the conservation practice applied through the Environmental Quality Incentives Program and its predecessor, the Great

Plains Conservation Program. The Environmental Quality Incentives Program is the main long-term Federal cost-share program

available to farmers and ranchers to help them prepare for and

withstand drought conditions.

On our State’s 26 million acres of grassland, we are using Environmental Quality Incentives Program funds to install cross fencing, water developments, and rotational grazing systems. On our 8

million acres of irrigated lands, we are utilizing Environmental

Quality Incentives Program to install more efficient water conservation practices, such as center pivots, subsurface drip irrigation, and surge systems. On our 10 million acres of dryland cropland, we are using Environmental Quality Incentives Program to

install terraces, grassed waterways, and expand our acreage of conservation tillage to conserve valuable soil moisture.

The Environmental Quality Incentives Program is our most valuable conservation cost-share tool for helping our State’s farmers

and ranchers prepare for drought on our working lands.

Let me now turn to what NRCS has done in Nebraska to deal

with the current drought. I go back to the Environmental Quality

Incentives Program where we are offering a deferred grazing option.

We are extremely concerned about the potential long-term impacts to our State’s grazing lands in our most drought-plagued

counties. Thanks to the outstanding input of our State Technical

Committee, we have made available funds from our fiscal year

2002 General EQIP Program for an incentive payment for prescribed grazing.

This opportunity is being offered in the 16 counties that first received national drought declaration. Landowners in these counties

may receive up to $2 an acre for prescribed grazing for the rest of

the season, and from May 15th to July 15th of next year. This will

hopefully allow these stressed grasslands an opportunity to recover,

assuming we receive adequate moisture this fall and winter.

Second, we have offered a variance to allow grazing and harvesting of crop stubble. Landowners who participate in farm programs

must meet highly erodible land requirements. Most highly erodible

land plans rely on crop residues on the soil surface. Winter feed

will be very short this winter. Landowners may need to bale and

glean stalks to get by. We have provided guidance to our field offices that they may temporarily issue a variance allowing the use

of crop residues on highly erodible dryland cropland for this purpose.

Then, finally, under the Resource Conservation Development

Program we are promoting Operation Hay Lift.

6

We sent a message to our national network for RCND councils

across the Nation in seeking them to reach out and get help and

refer them to the Orphan Grain Train International in Norfolk.

That is the summary I have today, and I thank you very much

for the opportunity to speak here.

[The prepared statement of Mr. Chick can be found in the appendix on page 59.]

Senator NELSON. Thank you very much, Steve.

Now Brian Wolford, the State Executive Director of the Nebraska

Farm Service Agency. We are sandwiching the director of agriculture in between some of our Federal folks and others.

Brian.

STATEMENT OF BRIAN WOLFORD, STATE EXECUTIVE

DIRECTOR, NEBRASKA FARM SERVICE AGENCY

Mr. WOLFORD. Good afternoon, Senator Nelson, and members of

the audience. Thank you for allowing me to testify before you

today. It is a pleasure to talk to you about what Nebraska Farm

Service Agency is trying to do to assist producers in our State.

As you are aware, a large portion of the United States is suffering from this moderate to extreme drought, and in Nebraska the

drought has adversely impacted crop production and pasture grazing across our entire State, beginning in our western counties this

spring and moving eastward throughout the growing season.

County FSA offices, along with personnel from other USDA agencies, which comprise our County Emergency Boards, have monitored and reported crop and pasture production losses throughout

the year. These reports describe the disaster conditions and provided estimates of crop and pasture losses in their counties.

Upon receipt of these reports at the State level, we compile these

reports and forward them on to the Nebraska Agricultural Statistics Service, which computes loss calculations compared to prior

year averages. Those counties which had at least one crop or pasture enterprise with a 30 percent or greater estimated loss were

then recommended by the USDA State Emergency Board to the

Governor for consideration of a Secretarial Natural Disaster Designation request.

At the present time, 37 Nebraska counties have received such a

designation. Nebraska Governor Mike Johanns has also requested

a disaster designation for the remaining 56 counties in Nebraska,

and these designation requests are pending. A map is attached to

my handout that shows you the counties that are approved and the

counties that are pending approval.

Once the disaster designations are approved, the designations

make available several things to producers: No. 1, a low-interest

FSA Emergency Loan Program; No. 2, it allows eligible FSA direct

loan borrowers in the primary or contiguous counties to be considered for Disaster Set-Aside Program; No. 3, allows SBA to utilize

a disaster loan program to assist businesses impacted from the disaster; four, serves as a documentation for the IRS allowing producers to defer income from certain livestock sales; and, finally, may

serve as part of the county eligibility requirements for other FSA

disaster assistance.

7

Briefly, some of the disaster assistance programs that we are operating right now include:

Conservation Reserve Program Haying and Grazing Release. By

mid-July all Nebraska counties had been released for emergency

haying and grazing, making available nearly a million acres for

this effort.

Emergency Conservation Program for Drought Assistance. ECP

provides a water supply to the livestock when they must be moved

to another pasture due to grass being depleted and there is no

other water source in the pasture. As of August 16th in Nebraska,

12 counties had been approved for ECP drought assistance. Three

counties had pending applications, and over $300,000 had been provided to producers through this program.

The NAP program, Non-Insured Assistance Program. In Nebraska, we had over 2,200 applications this year, and that program

is designed for producers who grow crops that are not covered by

normal Federal crop insurance programs. Pasture is one of those

crops. Producers are beginning to file Notice of Losses with our

counties, and this is the first step that they go through to initiate

benefit payments.

The Emergency Loan Program that I mentioned earlier is provided to family size farms and ranchers in primary and contiguous

counties. The producers must show that they could not receive

credit from other sources. At the present time 37 primary and 14

contiguous counties have the EM Loan Program available to them.

The Disaster Set-Aside Program is a program that allows existing Farm Loan Program borrowers to extend their payment to the

end of their loan as long as they can show repayment. The purpose

of this program is to relieve some of the immediate financial stress

caused by the disaster.

To further respond to feed needs of Nebraska cow/calf operations

drastically impacted by severe drought conditions, on the 12th of

August Secretary Veneman announced a $150 million cattle feed

program. This assistance will ease the shortage of feed due to

drought for the owners of Nebraska’s 1.9 million beef cows.

Nebraska FSA is working hard on drought assistance as well as

Farm bill implementation. Again, we thank you for this time.

[The prepared statement of Mr. Wolford can be found in the appendix on page 62.]

Senator NELSON. Well, thank you very much Brian.

Our next panelist is the Director of Agriculture for the State of

Nebraska, the Honorable Merlyn Carlson.

I might mention, Merlyn, before you start, that the Governor requested that the rest of the State—the counties be—and I wrote a

letter to Secretary Veneman requesting that this be handled as expeditiously as possible. I want to put my full support behind that

effort.

I also have a letter of position submitted by my colleague, Senator Hagel, on this issue that we would also like to put into the

record.

[The letter of Senator Hagel can be found in the appendix on

page 66.]

Senator NELSON. Merlyn.

8

STATEMENT OF MERLYN CARLSON, DIRECTOR, NEBRASKA

DEPARTMENT OF AGRICULTURE

Mr. CARLSON. OK. Thank you, Senator, for that support, and

thank you for the opportunity to appear today, and members of the

audience. I appreciate the opportunity to address the Senate Ag

Committee and express the drought-related concerns and issues of

the Governor and myself and of Nebraska agriculture industry. I

am hopeful and trust that the testimony you hear today will provide the insight and the platform from which to build a Federal

drought assistance package.

My assignment today is to provide you with an overview of the

drought situation in Nebraska and review action taken to date.

Given the brief time I have to speak, I will try not to duplicate the

message of my fellow panelists.

Needless to say, it has been a long summer for all of us involved

in agriculture. The set-up for the parched pastures, the dry

streambeds, the grasshopper-shredded fields, and the shriveled

crops that you see as you drive across the State began last fall, and

even further back for southwest Nebraska. The State Climate Assessment Response Committee began sounding the warning bell

months before spring planting and worked through its membership

to get the word out to its producers to be prepared.

Obviously, since that time, drought-related activities have continued to grow. Allow me to briefly recount our activities, keeping in

mind these address mostly my biased agriculture background.

The Governor has contacted USDA Secretary Ann Veneman on

numerous occasions, both in writing and personally. In partnering

with her office and the State Farm Service Agency, in particular,

the Governor has worked to get Conservation Reserve Program

acres released for emergency haying and grazing. The entire State

was released, as you have just heard, in early July.

He has requested, and will hopefully receive, designation of each

of Nebraska’s 93 counties as drought disasters, which would open

up the opportunity for producers to access low-interest loans and

other potential assistance programs.

The Governor, in cooperation with several of his State agencies,

opened up Nebraska roadsides for hay, and, to date, producers

have received 1,274 permits to hay roughly 6,860 miles of roadside

right-of-way, which is on a one-side basis.

The Governor has lobbied for and received Federal grasshopper

eradication dollars and designated matching State funds for the

program.

Both the Governor and I have been in contact with our congressional leadership, in writing and in person, to discuss the need for

Federal assistance programs such as the Livestock Assistance Program and the Crop Disaster Program and other possible programs

and assistance tools. I also had the opportunity in July to discuss

these needs with White House official Chuck Conner, who, as you

know, is the President’s assistant on agricultural issues.

Other issues. We have asked the Risk Management Agency to

encourage insurance companies to make crop damage adjustments

in a timely fashion and so that the remainder of the crop could be

used for livestock forage.

9

The Governor and I each have contacted our counterparts in

other drought-ravaged States to build cooperation, communication,

and collaboration on drought needs. Several agricultural leaders

have written me back, noting that they too are contacting their

congressional representatives to raise awareness of the need of assistance.

Then, finally, Nebraska governmental leaders have been meeting, and will continue to meet on a regular basis, to assess the

drought situation and make decisions on relevant actions. This includes topics such as pre-positioning of fire-fighting equipment, on

community water system checks and irrigation and stream flow

issues. In fact, a regular meeting of this group is taking place in

Lincoln as we talk right now.

I want to pause here and acknowledge the positive response we

received during our visits at the Federal level. The USDA, in particular, has been extremely open to listening and responding to our

requests and our suggestions. Let me thank our congressional delegation as well for your understanding and your dedication.

Then just last week Secretary Veneman announced the release of $150 million in emergency livestock feed assistance to qualifying

cow/calf producers. We are fortunate Nebraska was included in the

four-State program, and we appreciate that. We hope to have details on how that program will operate soon. Also on Friday Secretary Veneman announced the extension of CRP haying and grazing through November 30. The Governor had made the request

based on feedback from producers, and we are extremely grateful

for that approval.

All these activities have not been enough to stop Mother Nature

from robbing our State of its No. 1 economic driver. Figures compiled by University of Nebraska Agriculture Economist Roy Frederick in mid-July place the drought’s impact on agriculture in Ne- braska at roughly $686 million, and this figure includes estimated

yield losses on corn, sorghum, soybeans, wheat, hay, pasture. and

range. Dr. Frederick acknowledges the report is missing some significant factors. It leaves out losses for other nonprimary but important Nebraska crops. It does not include the increase in irrigation costs as producers pump around the clock to beat the dryness

and the heat.

My point is that $686 million in estimated agriculture losses and

resulting statewide economic impact of $1.4 billion is probably substantially higher, as we look today.

Is that a bleak projection? Yes. Is it overinflated? No. In fact, our

State is already struggling through these tough economic times.

We need a Federal drought assistance package, and we need it

now.

Based on these experiences, Senator, let me go through several

other tools that I would like to suggest: changes to tax law governing capital gains on livestock sales during a drought disaster; more

funding for grasshopper eradication with State match requirements

eased; the release of surplus Commodity Credit Corporation grain

for use in livestock feeding programs; raising the amount of coverage provided under the Non-Insured Crop Disaster Assistance

Program; and, finally, release of funds to help supplement the cost

of hauling forage supplies to needy producers.

10

I realize the picture I have laid out for you today is not very pretty, but it is factual, and it is reinforced by low stream flow and reservoir levels and a forecast that is not very promising. I hope the

information you receive from panelists today will be useful in your

deliberations. I thank you very much for the opportunity to testify

and I am happy to answer questions.

[The prepared statement of Mr. Carlson can be found in the appendix on page 68.]

Senator NELSON. Thank you, Merlyn.

Now we have Susan France from the Nebraska Department of

Natural Resources. Susan.

STATEMENT OF SUSAN FRANCE, DIVISION MANAGER OF

WATER ADMINISTRATION, STATE DEPARTMENT OF

NATURAL RESOURCES

Ms. FRANCE. Thank you, Senator.

Nebraska surface water laws are based on ‘‘first in time is first

in right’’. The Department of Natural Resources administers surface water such that during times of shortage newer water rights

are closed so that older water rights can use their appropriation.

My testimony will indicate the severity of this year’s drought on

surface water users.

This year water administration started 2 to 3 months earlier

than normal in the Platte River Basin, which is our most heavily

regulated basin. In mid-April, 54 water appropriations were closed

because a 1993 instream flow appropriation was not being met.

Instream flow requirements throughout the Platte Basin have not

been met for most of the summer on the lower end, which causes

all of the Platte, the Loup, the Elkhorn, and the Salt Basins to be

administered for the 1993 date. Previously, such administration did

not occur until late July.

Also, in late July, we will normally regulate for some 1930’s permits on the Platte. This year, as of June 24th, we had closed 106

appropriations for priorities in the 1890’s. In late July, we had as

many as 220 appropriations closed, some of which dated back to

1884.

Most of the larger irrigation districts located in the Platte River

Basin and the Republican River Basin early in the year knew that

they were not going to be able to deliver a normal supply because

of the lack of storage water in reservoirs. Farmers were notified

that they could expect to receive reduced amounts of water during

the season. Several irrigations districts stopped delivering water by

late July, when normally they operate through September. One irrigation district for the first time chose not to deliver any water because of an inadequate water supply.

Several irrigations districts in the Panhandle borrowed storage

water from a U.S. Bureau project located in Wyoming. However,

there is a repayment of such water that may cause problems in future years. Our largest reservoir in the State is being drawn down

to its lowest level since its construction in the 1930’s to meet irrigation and power demands. Inflows to this reservoir so far this year

have been the lowest of record since the reservoir was built.

In the Big Blue River Basin, we closed appropriations junior to

November 1, 1968, because State line flows required under a comVerDate 11-MAY-2000 14:57 May 12, 2003 Jkt 086217 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 86217.TXT SAG1 PsN: SAG1
11

pact with Kansas were not met for the first time since the compact

was enacted in 1971. This action included approximately 1,500 appropriators, mostly irrigators and storage owners. On the Little

Blue River, users junior to November 1, 1968, were also closed

twice because of the required compact flows not being met.

In the Hat Creek Basin, the Department closed 55 appropriations in an effort to satisfy a riparian right for cattle watering. This

is the first time that such a closing has been required in the summer months.

In summary, of the 12 water basins that we administer in the

State, only two have not had severe administration, and that is the

Missouri River trips and the Nemaha’s, both located on the eastern

edge. Everything else has been just a record administrative year.

If things do not get better—there is not a lot of snowpack up in

the Rockies this year and there is not a rainfall in Nebraska—it

will be much worse next year.

Thank you.

[The prepared statement of Ms. France can be found in the appendix on page 73.]

Senator NELSON. Thank you.

Now we have Rebecca Davis, the regional service director for the

Risk Management Services Office, and she comes to us from Topeka, Kansas. We appreciate your venturing to Nebraska.

STATEMENT OF REBECCA DAVIS, DIRECTOR OF THE TOPEKA

REGIONAL OFFICE, RISK MANAGEMENT AGENCY, U.S.

DEPARTMENT OF AGRICULTURE

Ms. DAVIS. Thank you. Mr. Chairman and members of the committee, thank you for this opportunity to discuss how the programs

of the Risk Management Agency are working to help producers survive this drought.

I am Rebecca Davis, the director of the Topeka Regional Office

for the Risk Management Agency. I grew up on a farm in Franklin

County, Kansas, where my family still farms. My family has also

carried multiple-peril crop insurance for nearly 20 years. Believe

me, when issues arise, I hear about them.

The Ag Risk Protection Act of 2000, a sweeping bipartisan law

that this committee worked on for nearly 2 years, significantly increased the ability of producers to manage their agricultural risk

through crop insurance and other risk-reducing strategies and programs. The act also established a new alliance consisting of RMA,

reinsured companies, and the Farm Service Agency to help ensure

program integrity and compliance.

For the balance of my testimony, I would like to touch upon how

some of these changes have benefited Nebraska farmers.

In 2001, RMA provided Nebraska’s farmers over $2.3 billion in

protection through more than 101,000 policies covering 13 million

acres of crops. In 2001, at least $69 million in losses were paid to

hard-hit family farmers.

Based on 2001 NASS planted acres, multiple-peril crop insurance

is protecting approximately 81 percent of the corn acres, 85 percent

of the soybean acres, 84 percent of the wheat acres. All of these are

above the national average for all three crops. For example, the

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U.S. average for corn is 80.3 percent, soybeans is 76 percent, and

wheat is 77 percent.

Insurable crops in Nebraska are barley, corn, dry beans, grain

sorghum, hybrid corn seed, millet, oats, popcorn, potatoes, rye, soybeans, sugar beets, sunflowers, wheat, and nursery. In addition, we

extended coverage through written agreements for forage seeding

and forage production.

Although 2002 data is still being processed by crop insurance

companies, participation levels will be similar to those in 2001.

However, over $12.8 million in indemnities has already been paid.

Since 52 percent of these payments are for wheat and drought conditions are continuing, we expect losses to grow significantly for

spring planted crops.

In 1998, due to the way premium subsidies were structured, the

coverage level that offered the most coverage for the lowest price

was at 65 percent of the producer’s historical yield. As a result, the

majority of the growers purchased this level of protection. Because

ARPA made higher levels of protection more affordable by increasing subsidies at higher coverage levels, this number began to shift

dramatically with the enactment of ARPA.

Prior to 2001, the premium subsidy at the 70 percent coverage

level was 32 percent. The ARPA increased the subsidy rate to 59

percent, and Nebraska producers have responded. For example, in

1998, only one in ten of the wheat producers had coverage at or

above the 70 percent coverage level. By comparison, in 2002, 12 out

of 20 producers are insured at the 70 percent coverage level or

higher.

Corn, soybean, and grain sorghum producers have responded in

a similar manner. Corn moved from 6 percent to over 69 percent

of producers having a 70 percent or higher coverage level; soybeans

changed from 10.5 percent to over 74 percent; and grain sorghum

rose from less than 5 percent to over 61 percent.

This movement to higher levels of coverage means that RMA and

reinsured companies will automatically provide more assistance to

Nebraska farmers when they need it the most.

There have been a few 2002 program adjustments. In order to

process claims quickly and speed assistance to producers, crop insurance companies have implemented appraisal modification procedures under RMA guidelines. Current appraisal modifications are

permitted in Nebraska, if conditions warrant, for corn, popcorn, hybrid seed corn, and grain sorghum.

Further, RMA and reinsured companies have quickly implemented a provision of the Farm Security and Rural Investment Act

that will give producers more flexibility in determining quality

losses. Prior to implementation, evidence of quality losses could

only be determined by samples analyzed by a grain grader licensed

under the authority of the United States Grain Standards Act or

the United States Warehouse Act. Now evidence of quality loss

may be determined by graders licensed under State law.

In conclusion, the use of crop insurance is a widely accepted

practice in Nebraska. Because producers are now participating at

higher levels of coverage, USDA can automatically provide the assistance they need when they need it the most.

Thank you for the opportunity to comment.

13

[The prepared statement of Ms. Davis can be found in the appendix on page 74.]

Senator NELSON. Thank you.

My first question would be to Merlyn Carlson. In your estimation, how long has southwest Nebraska, just as one part of our

State, been rainfall deficient?

Mr. CARLSON. It appears 3 years, Senator. It has failed to have

spring for 3 years. It is in tough shape.

Senator NELSON. Of course, the winters have not been productive

in terms of snowmelt for the snow contribution.

Mr. CARLSON. Ms. France would say the water allocation has

been jeopardized over that period as well.

Senator NELSON. Steve Chick, as you mentioned, we yesterday

toured in the field some acres that have been enrolled in the EQIP

program and have been very satisfactorily repaired to the point

where now that it is a positive situation for soil that is not very

permeable.

How many acres of Nebraska cropland and pasture land are currently enrolled in the EQIP Program, approximately?

Mr. CHICK. That is a good question, Senator. Approximately, we

have about 2,000 contracts right now in the EQIP program that

have been in place over the last 4 years. Acreage-wise, it is probably somewhere in the range of a half million acres. We had a request of $200 million this year for EQIP contracts, and currently

our allocation is $11 million. The demand is still far greater than

what we can meet.

Senator NELSON. That is at this time. Do you have any thought

about how much that is likely to expand in the new Farm bill?

Mr. CHICK. Well, this fiscal year was the first piece of the new

Farm bill. That increased interest went from 3 times as many applications to 20 times as many applications money available, and

I would expect to see that probably increase even more in the next

couple of years.

Senator NELSON. It is oversubscribed at the moment. At least

there is an abundant amount of interest. Taking anything from

that for any other purpose would begin to impact the availability

of those dollars for people who are standing in line ready, willing,

and able to participate. Is that accurate?

Mr. CHICK. As I said in my testimony, the EQIP program is the

only real long-term Federal program we have for addressing saltwater conservation to protect it for long-term drought prevention.

As I said, the demand is 20 times what we have available now.

Even with the tough economy, farmers and ranchers are wanting

to do more conservation.

Senator NELSON. Thank you.

Brian, what are the dollar limitations on FSA emergency loans

at the present time?

Mr. WOLFORD. The dollar limitations in regard to emergency

loans—we do not have a specific dollar limitation. We can take the

applications, and as we need money and build those applications

and those dollars, we can request additional money. Presently, we

have just a few applications. Keep in mind, our emergency loan

program—you have to go through your production—your harvest

and prove your production loss before you can apply.

14

Senator NELSON. With whatever money might be available, do

you think that will be adequate for what you would anticipate

would be the applications coming in after harvest?

Mr. WOLFORD. We are very concerned about a large number of

applications coming in for this program. What we are doing is we

are working with our lenders trying to promote the Guarantee

Loan Program as well, and just try and encourage producers and

lenders alike to start this process very early so we can be prepared

and capture or request that money before other States do.

Senator NELSON. Even though we are pleased that the loan program is available, isn’t it accurate to say that most farmers who

have experienced drought for several years have already had adverse economic conditions hit them? Maybe the last thing they

need is another loan.

Mr. WOLFORD. Being a former lender, I have heard that said before, and that is true in some cases. There are some people that

that is what they need.

Senator NELSON. One need not disparage the loan program to

recognize that in some cases it simply is not the answer.

Mr. WOLFORD. For some people, it is not.

Senator NELSON. One of the questions that I would like to ask

is—and it may have been answered in part by what Merlyn said.

No matter how many pieces of relief we have been able to put

out there—and, once again, no disparaging comments about these

efforts would be appropriate. No matter how many we put out

there, we are just not getting to where we need to be for many of

our producers, both in the livestock and on the commodity side. Is

that a fair statement? I am not trying to trap you, Merlyn. That

is what I heard you say.

Mr. CARLSON. Well, that is exactly right. We need two things:

one is money and the other is rain.

[Laughter.]

Senator NELSON. Well, in Washington today sometimes there is

more rain than there is money, but at least there is a lot of fog.

In any event, clearly putting together something, as you said,

now is what is critical so that we don’t delay and allow the aid to

come when it is clearly too late.

Mr. CARLSON. Well, that is exactly right. You know, the attitude

in the drought-stricken area is just extremely serious, and it is

worsening as we talk, worsening each day. Aid and help are very

much needed as we go into the fall and into preparing for winter

feed, as well as worrying about next spring.

Senator NELSON. Well, I thank you all for your very enlightened

information and your statements, and for your being here today,

and there will be more opportunity for us to discuss how this is

moving forward.

One final question of our friends who are administering some of

the Federal programs. Are you going to be up against some administrative challenges in terms of having enough budget support for

some of the programs that you might need to put in place or that

you are currently administering?

Mr. CHICK. Well—— Senator NELSON. It is a softball, but I wanted to throw it your

way.

15

Mr. CHICK. That is certainly always a challenge, meeting the demand when you have increasing programs. We are appreciative

that reimbursables come with those programs for us. We will do

the very best job we can to try to meet the demands of the increasing programs.

Senator NELSON. Brian, is that—— Mr. WOLFORD. I would agree. We have a great staff that works

very hard for our producers. They are implementing a new farm

bill. If additional programs come their way, they will be glad to do

that as well, but it will be increased workload for them.

Ms. DAVIS. My comments would echo the other two USDA representatives. In this day and age, we got used to doing more with

less, and we have been working well with the crop insurance companies to get a program out there that is hopefully meeting the

needs of the family farmers.

Senator NELSON. Well, again, thank you very much. I appreciate

it.

Senator NELSON. Well, on our second panel, as you can see from

the names, we have representatives of some of the associations who

are most directly affected because of the agricultural nature of

their association.

I start first with Don Batie from Farm Bureau. Don, would you,

please, provide us with your thoughts.

STATEMENT OF DON BATIE, FARMER, DAWSON COUNTY,

NEBRASKA; ON BEHALF OF THE NEBRASKA FARM BUREAU

Mr. BATIE. Thank you, Senator. Good afternoon, Senator Nelson

and members of the committee. I am Don Batie, and I farm in

rural Dawson County. I serve on the Nebraska Farm Bureau Board

of Directors representing southwest Nebraska. I am here today representing Nebraska Farm Bureau, the largest general farm organization in the State, and wish to extend our appreciation to the Senate Ag Committee for holding the field hearing here in Nebraska

concerning the drought.

The drought we are continuing to experience this year in Nebraska is approaching historic proportions. My father, who is 81,

has told me this is much worse than the 1950’s drought and is rapidly approaching the 1930’s Dust Bowl conditions. Only our modern

farming techniques have allowed us to raise at least a partial crop.

The portion of agriculture that is currently being hit the hardest

is the livestock sector, principally the ranchers that have cow/calf

operations. The recently passed Farm bill and the crop insurance

reforms made a few years ago have provided grain farmers risk

management tools and will provide them with some safety net.

Livestock operators, on the other hand, have little or no risk management tools available to them and have no Federal safety net.

Growers of non-insurable crops, such as millet and other alternative crops, primarily grown in the western part of Nebraska, are

also facing financial difficulty and great uncertainty at this time.

Pasture conditions have been dismal all year with many grasses

never breaking dormancy this spring. Our neighbors that have

cows have been making some very tough decisions lately. Many

ranchers have been forced to sell part or all of their herds. One

young rancher in my neighborhood is selling half his cow herd just

16

to pay for the feed for the remaining cows until October, when he

can move them onto cornstalks after harvest. Unfortunately, with

all the cows going to market right now, prices are very low.

A very real concern most ranchers have is whether the grass will

come back next year. While most of the native grasses will return

when the weather improves, it will take a couple years to get back

to normal. Hence, they will have increased costs and lowered stocking rates for the next several years.

For these reasons, we think Congress should make the Livestock

Assistance Program a priority in any drought assistance package

under consideration. The LAP program is about the only form of

assistance available to livestock producers having no opportunities

for insurance or other risk management tools. As each day passes

with no clear signal from Congress and the administration about

the availability of the LAP, more and more cattle producers will be

making lifelong decisions about the future of their operations, most

of which have taken many generations and much hard work to establish.

From a producer’s standpoint, it seems we are caught in the middle of a political battle regarding how Congress should fund disaster legislation. We certainly understand the fiscal need for Congress to find budget offsets, and we do believe Congress could easily find budget savings from the lower anticipated costs anticipated

this fall and next year in farm program spending. Regardless of if

or how Congress deals with the budget offset issue, however, the

bottom line for producers is we need disaster assistance enacted

immediately and a clear signal from Congress that the LAP program will be funded even sooner.

Compounding the drought is the grasshopper infestation. Many

ranchers in central Nebraska have been forced to spray for grasshoppers. We could not wait for the Federal Government to act since

the grasshoppers were spreading fast. All of us had to pay the entire costs ourselves.

The drought is also causing major concern among the State

irrigators, as you heard Sue France tell earlier. Part of the reason

there is any crop at all in Nebraska this year has been due to the

ground and surface water irrigation developed over the years.

There is much concern that if the drought extends next year there

will be little or no storage water available as the reservoirs in the

whole system are at or near historic lows.

From an organizational standpoint, Nebraska Farm Bureau has

tried to keep a handle on the severity of the drought by initiating

a Drought Scout Program. We identified 80 Farm Bureau members

scattered across the State, who all summer have been making

weekly reports on rainfall and crop conditions in their area to the

State office. This information, in turn, has been shared with State

and Federal officials to help develop drought response actions. Our

most recent Drought Scout report has been attached to the written

testimony.

This drought will have long-term impacts on farmers and ranchers, and it may take years to get back to normal, from both a water

supply and the forage capacity standpoint. The most helpful action

Congress can do now is to fund the LAP as soon as possible. Crop

17

assistance to grain farmers should be legislatively developed this

fall after their needs can be greater assessed.

In addition, Congress could consider other long-term assistance

actions: extending the 2-year capital gain deferral for the forced liquidation of cow herds; increasing advance direct payments to crop

producers; enhancing the non-insured crop assistance programs.

We encourage more cooperation between Federal, State, and local

agencies dealing with the shortages of water in irrigation reserves;

increasing funding or fully utilizing any emergency funds to provide APHIS additional resources to help with the grasshopper control.

Thank you for the opportunity to present testimony today. We

look forward to working with members of the Senate Ag Committee

to help develop a drought assistance package.

[The prepared statement of Mr. Batie can be found in the appendix on page 77.]

Senator NELSON. Thank you, Don.

Now John Hansen from Farmers Union.

STATEMENT OF JOHN K. HANSEN, PRESIDENT, NEBRASKA

FARMERS UNION, LINCOLN, NEBRASKA

Mr. HANSEN. Senator Nelson, on behalf of the over 4,300 farmer

and ranch families in the Nebraska Farmers Union, we thank you

for sponsoring this critical hearing today. We also thank you for

your cosponsorship of S. 2800, which, in our opinion and the opinion of 20 national organizations who signed on a ‘‘dear colleague’’ letter circulated by the National Farmers Union, is the most appropriate national emergency disaster relief proposal. I am attaching

a copy of the July 30, 2002, sign-on letter along with my testimony.

In the limited amount of time available for testimony today, I

want to focus less on the extent of the economic damage, which is

massive, and more on what my organization believes is an appropriate national response to this natural disaster that is impacting

nearly 50 percent of our Nation. How our government chooses to

respond to this national emergency will decide whether or not thousands of our independent family farmers and ranchers will be in

business next year or not.

Our Nation is the largest food-producing nation in the world. It

stands to reason that our Nation should have a national policy for

dealing with the economic hardships caused by natural disasters

that adversely impact our Nation’s food and fiber producers. We

had the opportunity to do just that during the development of the

2002 Farm bill. To the credit of the Senate, the Senate did include

in their version of the Farm bill a permanent provision to deal with

national natural disasters. That was the right approach.

Unfortunately, because of the opposition of the House of Representatives leadership and the Bush administration, the Senate

emergency disaster provision was stripped out of the conference

committee during deliberations. Tragically, that leaves our Nation’s

family farmers and ranchers without an appropriate income safety

net in times of weather-related natural disaster.

It was particularly critical for the 2002 Farm bill to include that

emergency disaster authority because of the counter-cyclical nature

of the Farm bill income supports, which includes loan deficiency

18

payments and deficiency payments. An obvious income safety net

problem for crop producers exists when weather-related shortfalls

in production cause commodity prices to go up, and commodity producers are left without crops to sell, LDPs to collect, or deficiency

payments. The Senate version of the Farm bill did appropriately

include permanent emergency disaster provisions.

The issue of emergency disaster assistance could be quickly resolved if the House of Representatives leadership and the Bush administration would simply step forward and support ad hoc emergency disaster assistance paid for out of general funds. After all,

that is how our Nation has been paying for emergency disaster assistance situations out of general funds and without offsets since

1989. In fact, when former President George Bush Senior and

former President Bill Clinton both yielded to pressure from the

rural community and threw their support behind the emergency

disaster assistance authorization, Congress did, in fact, respond

quickly and positively. I believe that our organization continues to

support a national domestic food security principle, which includes

the protection of food and fiber producers. We believe it would be

a terrible mistake for our Nation to abandon our long-standing

commitment to standing behind our Nation’s food producers in

times of weather-related natural disasters.

S. 2800 is modeled after the year 2000 emergency disaster program, which is appropriate. We support S. 2800 because it includes

emergency disaster assistance for both 2001 and 2002 for both

grain and livestock losses. That is critical. That is the kind of comprehensive approach that is needed to keep our farmers and ranchers in business, which should be the goal of emergency disaster assistance. To do anything less means that thousands of family farmers and ranchers will be forced out of business.

We strongly oppose funding emergency disaster provisions by offsetting them out of the Farm bill, the budget of which is designed

to mitigate the impacts of low commodity prices over the life of the

Farm bill. It is not fair for one segment of agriculture that is facing

economic disaster to help finance another sector of agriculture also

facing economic disaster. It makes no sense to rob farm program

dollars in a low-spending year knowing full well those dollars will

be needed to pay for low commodity prices when more normal crop

production returns.

The rest of my remarks are included in my written testimony,

and I will be glad to answer any questions. Again, thank you, Senator Nelson for coming here today and also, again, for your cosponsorship of S. 2800.

[The prepared statement of Mr. Hansen can be found in the appendix on page 88.]

Senator NELSON. Thank you very much, John.

[Applause.]

Senator NELSON. It looks to me like your popularity and maybe

your membership just rose.

David Bruntz from the Nebraska Cattlemen. David.

19

STATEMENT OF DAVID BRUNTZ, PAST PRESIDENT, NEBRASKA

CATTLEMEN, INC.

Mr. BRUNTZ. Senator Nelson, and members of the Senate Ag, Nutrition and Forestry Committee, my name is Dave Bruntz. I am a

farmer and cattle feeder from Friend in East Central Nebraska. I

am testifying today on behalf of the Nebraska Cattlemen, an organization where I served as president in 1997.

Unfortunately, today’s hearing conflicts with the Nebraska

Cattlemen Board of Directors meeting in Alliance, which had been

scheduled several months ago. The association’s leadership felt it

best to not reschedule this meeting at such a busy time of year,

and they send their regards to you and your colleagues present at

today’s hearing.

On behalf of the Nebraska Cattlemen, please include my full

written statement in the record for today’s hearing.

My family operates a typical diversified family farm in eastern

Nebraska. Our operation includes irrigated corn and dryland corn,

irrigated soybeans and dryland beans, forages such as alfalfa hay

and wild hay, dryland pasture, and cattle feeding and cow/calf operation.

The drought of 2002 has had a tremendous impact on our operation. Hay yields have been cut in half and by more, and our

dryland corn crop was harvested as poor-quality silage. Pastures

and livestock watering ponds are being depleted before cows can be

moved to cornstalks or other alternative forage sources. Our cows

and calves are already in dry lot and being fed until cornfields are

available after harvest.

According to the August 12, 2002, Nebraska Weather and Crop

Report, issued by Nebraska Ag Statistics Service, the drought has

had the following impacts in Nebraska:

Nebraska pasture and range conditions rated 64 percent very

poor, 27 percent poor, 9 percent fair. These figures are well below

the average, causing producers to continue to provide supplemental

feed or dry-lot cattle, and/or cull deeper into their herds.

Nebraska alfalfa conditions rated 40 percent very poor, 31 percent poor, 18 percent fair, and 11 percent good. All well below the

average.

Nebraska corn conditions overall rated 34 percent good and excellent. On irrigated corn being rated 56 percent good and excellent, below the 5-year average of 76 percent. Dryland corn rated 4

percent good and excellent, far below the average of 47 percent.

The U.S. corn crop is rated at 39 percent good or excellent with the

5-year average being 62 percent.

The Nebraska soybean conditions are rated at 28 percent very

poor, 27 percent poor, 30 percent fair, 15 percent good, and 1 percent excellent. Well below last year’s averages. The U.S. bean crop

is 42 percent good to excellent, with a 5-year average being 58 percent.

You can see how the cost of feed for these cattle herds will increase with a drought of this magnitude. Please find several charts

also developed by Nebraska Ag Statistics Service attached to my

statement. These charts provide numerous pieces of critical information.

20

Graph 1 is hay prices, both alfalfa and grass. They have skyrocketed in the past 60 days. The June to July 2002 increase for

all hay prices was $15 per ton, the largest month-over-month increase since this data series was begun in 1949 and 44 percent

higher than July of 2000.

Graph 2 shows that while December 2001 and May 2002 hay

stocks are consistent with previous years, the tremendous decline

in production is anticipated to have significant impact on December

2002 and future hay stocks.

Graph 3, forecasted hay production for 2002 plus May 2002

stocks are projected to be the lowest in the past 14 years.

Graph 4 is a demonstration of drought conditions in Nebraska

with pasture and rangeland conditions in 91 of Nebraska’s 93 counties labeled at poor to very poor.

As you know, the sand hills of Nebraska are noted for having excellent grazing and producing some of the best cattle in the United

States. This reputation for cattle of this quality has been accomplished by years of genetic improvement by these ranchers. The

cattle industry cannot afford to see these herds liquidated due to

lack of assistance because it will take years to rebuild this genetic

pool of quality cattle.

Undeniably, Nebraska and several other Western States are experiencing a drought of historical proportions. This type of natural

disaster too often creates scenarios where elected officials and Government agencies are forced to pick sides based on geographical

boundaries or the type of commodity produced.

Unfortunately, this drought will be no different. This time it is

livestock producers who need your assistance. Under existing programs found in the 2002 Farm bill, crop producers will gain some

relief through direct payments and federally subsidized crop insurance benefits.

In fact, during this year’s rewrite of Federal farm policy, many

mainstream grain groups asked that emergency provisions of current law be scrapped in favor of counter-cyclical measures to protect farm income.

This time around Congress listened, and these wishes were

granted. More money has been funneled into the Federal crop insurance program to increase producer participation rates and to

offset natural disasters such as drought facing Nebraska grain producers.

Additionally, producers will continue to receive Market Transition payments in 2002.

The rest of my testimony is in written testimony. I would like to

thank you for allowing the Cattlemen to present at this hearing.

Any questions, we will try to answer them.

[The prepared statement of Mr. Bruntz can be found in the appendix on page 90.]

Senator NELSON. Thank you, Dave. I appreciate your being here,

and the rest of your testimony will be included in the record.

We now have Joy Philippi from the Pork Producers. Good to have

you here, Joy.

21

STATEMENT OF JOY M. PHILIPPI, BOARD MEMBER, NATIONAL

PORK PRODUCERS COUNCIL

Ms. PHILIPPI. Mr. Chairman, thank you for holding this hearing

on the drought today.

My name is Joy Philippi. I am a farmer and swine producer from

Bruning, Nebraska. On behalf of the swine industry, I would like

to thank you, Senator Nelson, for including our producers in today’s proceedings.

I am speaking to you today as a producer of corn, soybeans, and

swine who has not had any rain since the 29th of May.

Now, the day I wrote this, that was how it was. It did rain Saturday night. We do have a little bit of moisture now.

Senator NELSON. Maybe I should have had this hearing earlier.

Ms. PHILIPPI. Well, we had 0.08, so that was double what we had

between the 29th of May and that day. We were pretty pleased.

Currently, I am a member of the Board of Directors of the National Pork Producers Council, and I have been involved in leadership with the Nebraska Pork Producers over the past several years.

I have consulted with our leaders in order to write the testimony

for today.

Swine producers recognize the partnership between all producers

in production agriculture. We appreciate the assistance that is

being offered to our friends in the cattle industry, and we definitely

recognize tremendous production losses in the grain industry.

However, we ask that you recognize the challenges the drought

of 2002 presents for the swine industry.

Many times it is presumed that drought problems only affect

crop production. Animal agriculture is the No. 1 consumer of grain

products produced here in Nebraska and across the Nation. As the

drought continues, we see our crops weaken and we continue to

have increased worries as pork producers as to what effect that will

have on our operations in the long term.

In my written testimony today, I outline the crop drought conditions that were reviewed earlier by Mr. Chick and by several other

members of the panel. As this year progresses, and on into 2003,

all producer support will be affected to some degree by the emergency conditions created by this drought.

For the diversified producers who are the masters of value-added

agriculture, these concerns are very great. As feed stock supply

goes down, our cost of production goes up. We are caught in a

catch–22.

When grain price goes up, we get the assistance that we have

from the Federal farm program from crop insurance and higher

prices, but every time the price goes up for grain, the cost of production goes up for hogs. Here in Nebraska, 85 percent of our producers operate diversified operations. That produces 65 to 70 percent of the swine marketed out of our State.

Recently, Dr. Mike Brumm, Extension Swine specialist for the

University of Nebraska, estimated that for every 10-cent increase

in the price of grain, our cost of production per hundredweight goes

up 50 cents.

Over the past 14 trading days, our cost of production has increased a $1.50 to $2 a hundred. Today’s market was $31. When

22

you get to figuring that out, it is going to be hard to remain financially sound throughout the next year.

These increasing costs, as well as the other production concerns,

including poor rate of gain, some livestock losses, and some impaired salary breeding, stress our industry even further. In fact, I

know of two producers who have made the decision recently to liquidate 500-, 600-head herds because they are living in dryland

areas. There will be no crop available off of their farms, and they

felt it was financially in their best interest to leave production.

We do echo the sentiments of our friends in the beef industry

and Farm Bureau and others that believe that the Livestock Assistance Program could be reworked and that we could look at

some type of additions to that program that would include feed

grain stocks.

We believe that the program has some merit. It is a good shell

right now. There are provisions there already for qualification. We

would like to see those provisions adjusted. Right now, they are on

your gross income, and that is not really the way to look at income

in the livestock industry. It is better to look at, like, an adjusted

gross income and look at those things to find profits.

We believe this is one way that we can benefit all of animal agriculture through that program, and we would encourage you to look

into that further.

The one thing I will ask, though, is that as we look at the Livestock Assistance Program—that if it is appropriated, that those

funds do not come from offset farm bill funding.

Our producers tirelessly addressed the conservation title in the

Farm bill. We felt that the EQIP funding was one way to benefit

our industry and all of animal agriculture. It provides some risk

management tools. It also allows us the opportunity to upgrade our

facilities, according to the new rules in the EPA, and that we would

be able to produce very safe product that the consumers want.

I have to emphasize that. We believe that offsets are just like a

self-funded emergency package. There is not many disasters where

producers or the people that are affected have to put a down payment down in order to get their disaster relief. We would encourage

you to work with your colleagues and stay away from the Farm bill

funding for that program.

I have outlined in my printed testimony the major points that we

wanted to stress today, and being those I have mentioned, we also

believe that we need to look at the capital gains tax. We believe

that changes in that will be beneficial to our industry as well as

to the cattlemen and others in livestock as they have to liquidate.

We would also encourage you to address all of our needs in a bipartisan fashion. Right now, this drought is not discriminatory,

and it is affecting all of us in different ways. We believe that, as

we look at assistance packages, that is the same way that we

would like to have that accomplished.

With that, we would encourage you to speak with the Secretary

of Agriculture. We believe that it would be tremendously important

to our industry if she would consider using all the resources and

her powers to aggressively move more pork and beef. We have a

bulk product out there, and if she would help move some of that

23

even farther into some of the Government food services, it would

be good for our industry.

With that, I thank you, Mr. Chairman. If there are any questions

I can answer, I would be glad to do so.

[The prepared statement of Ms. Philippi can be found in the appendix on page 96.]

Senator NELSON. Well, thank you, Joy.

My first question goes to Don Batie. I thought you had an excellent set of recommendations. I agree that those are things that we

ought to consider as well, though I am trying to understand whether the Nebraska Farm Bureau is moving away from the American

Farm Bureau’s support of Senate bill 2800.

I understand—and both you and Dave pointed out the problem

with politics wrapping this issue around the axle in Washington,

but you also said the disaster assistance needs to be enacted immediately, as does Dave. Your national organizations have endorsed

the emergency legislation without pursuing and being required to

pursue offsets.

Are the local organizations of the same opinion that the national

organizations are of, or on those opinions have you departed? I am

just trying to understand.

Mr. BATIE. As far as Nebraska Farm Bureau, we have not disagreed with this policy of American Farm Bureau. However, you do

have to realize that some political expediency—I am quite sure that

the American Farm Bureau was supporting that bill before you

went into your August recess, and the whole issue was let’s get

something passed soon. That is of the utmost importance, the sooner the better.

The reason I was testifying about the offsets is the political realities. The President has said he will veto any bill that does not include offsets. I don’t want to see a prolonged battle between Congress and the President. Therefore, the sooner the better. In my

opinion, we might need to look at offsets.

I agree with you in your opening statement. I do not want to

jeopardize future payments or EQIP funding or another area. That

is moneys that are not going to be spent anyhow. That is the

money we are looking at offsetting.

Senator NELSON. Well, I hope there is some of that.

David.

Mr. BRUNTZ. I believe some of these offsets will occur naturally

due to the rise in grain prices. We will not have the LDP payments, which amount to a large part of the budget of agriculture,

and I believe that will occur naturally.

I do not believe we can come up with enough offsets to fund what

is needed on the short term, and time is of the essence in the livestock industry.

Senator NELSON. Well, one of the concerns is that it has been

suggested that you can take—because of the expected lower payments that will be required because of, perhaps, some good fortune

along the way, that there could be some savings. The problem is

the CBO has not been directed to score that savings to where you

can use that going into this program.

24

Now, I am not going to try to justify Enron’s accounting any

more than anyone else would, nor do I want to support the CBO’s

decision on this, but that is the hangup that we have.

If it was possible to do what you are talking about, and if that

money then would not otherwise fall back into the farm program

for the future, I could certainly look at that. So far, no one has

been able to point out how we can do that.

I want us to always think about what is possible. We do not want

this wrapped around the axle in Washington, but the President has

some power about whether is gets wrapped around the axle. The

other party has some power whether it gets wrapped around the

axle, and so do we.

This is a bipartisan bill, by the way. Senator Helms and Senator

Conrad Burns have signed on to it, and that was just before the

break. There may be others who are looking to sign on to it as well.

I appreciate your candor and your support.

Joy, one of the questions that I might ask you is, from your

knowledge, whether the U.S. livestock sector has ever sought a

standing Federal disaster program other than the Livestock Assistance (LAP) program, and if not, whether you think that something

like that might be good for the future, given the fact that we are

ad hoc trying to play sandlot baseball right now rather than having

something organized?

Ms. PHILIPPI. The reason we thought the Livestock Assistance

Program is because of the qualification parameters being there already.

On our board, we have not had official discussion with some of

the members. We have discussed possibilities of expanding the insurance program—that Sapida project right now—bringing that

into Nebraska and other Midwestern States as well. We think that

would be a good risk management tool.

The other thing is then when we look for disaster assistance, it

would truly be disaster assistance, but we would also have that

same assurance that the crop producers have.

That is where our thinking has been going at this point. We have

not expanded on that because, for us, right now is when we are

really looking into what our losses could be from the drought.

Senator NELSON. All right. It is hard to look forward when you

are wrapped up in where you presently are, but I hope that at

some point we begin to think about what other risk management

tools we could put into place in the future so that, should we encounter something that is unparallel since the 1930’s, that we at

least have some tools already in place, and that we are just simply

supplementing rather than building something basically from

scratch, even though the Livestock Assistance Program is there. It

will not be enough. It is not going to get us where we need to be.

Well, I appreciate very much, your being here. I may have another question. Just a second.

Oh, I am supposed to remind everybody, we are going to have a

5-minute break after your panel here and before the third panel.

I misspoke. There are four panels today. The third one is broken

into two groups. There will be four panels.

25

I thank you very much. I appreciate it and look forward to working with you to sort this out and smooth out the rough edges that

we are facing. Thank you.

[Recess.]

Senator NELSON. We will come back to order. There should be

enough time at the end of the panels to get some questions and/

or comments from the audience, which we hope to be able to do.

All right. The first panelist, James Vorderstrasse. Did I get it

right?

Mr. VORDERSTRASSE. That is right.

Senator NELSON. Pretty close enough? OK. Vice President for

Legislation, the National Grain Sorghum Producers, please share

your views with us.

STATEMENT OF JAMES VORDERSTRASSE, VICE PRESIDENT

FOR LEGISLATION, NATIONAL GRAIN SORGHUM PRODUCERS

Mr. VORDERSTRASSE. Thank you. Senator Nelson, fellow members

of the Committee, I thank you for convening this urgent and important hearing today.

My name is James Vorderstrasse. I farm 4 miles north of Chester in southern Nebraska. I am a dryland farmer, and raise grain

sorghum, wheat, soybeans, corn, hay, and manage a cow/calf herd

on rangeland.

I serve the National Grain Sorghum Producers as Vice President

for Legislation, and also serve on the Nebraska Grain Sorghum

Producers Board of Directors.

The fact that I am here to discuss the grain sorghum situation

should speak volumes about the severity of the drought in Nebraska and throughout most of the U.S. Great Plains. This is because grain sorghum is an extremely drought-tolerant, resilient

crop that is known for its ability to survive without water for long

periods of time and bounce back when water again becomes available. Senator Nelson, this year there won’t be much grain sorghum

bouncing back for the Great Plains or Nebraska.

Even grain sorghum is being victimized by the disaster facing

U.S. farmers this year. The U.S. is predicted to harvest the smallest sorghum crop since 1956, in large part due to the magnitude

of the drought.

Early USDA estimates predicts that Nebraska sorghum production will plummet almost 60 percent from last year, and sorghum

yields will range 25 to 70 percent of normal, with similar sorghum

yields forecast nationwide. Meanwhile, on my operation, my soybeans will yield 40 percent of normal to zero, while expectations

are for most of the corn crop to be cut for silage.

As a result of the grain shortages, prices of grain are predicted

to increase, but dryland farmers with little or nothing to harvest

will not be able to take advantage of the higher commodity prices.

Additionally, while we appreciate your work to craft and pass a

much needed farm bill this year, higher commodity prices will likely mean no counter-cyclical payments.

Grain sorghum farmers were pleased to see more improved treatment of grain sorghum in loan rates in the new Farm bill, but sorghum farmers with no crop to harvest will not receive any benefit

from this either.

26

Further, throughout much of the U.S Sorghum Belt, multipleyear droughts on the Plains which have led to disaster assistance

have destroyed guaranteed yields for crop insurance purposes, unfortunately making the program largely ineffective as a solution to

this year’s widespread disaster.

Senator Nelson, we implore you and your colleagues to persevere

in your work to address the situation, and we appreciate the early

efforts that have been made so far, but some form of disaster legislation will be needed if farm families, as well as their rural communities and schools, are to remain viable in the face of the devastating conditions.

Recently, the National Grain Sorghum Producers Board of Directors passed a resolution urging Congress to pass disaster legislation that would get much needed funds into the hands of affected

farm families as soon as possible.

Further, NGSP recommends that this disaster package be similar to past efforts and at similar levels as in the past.

Senator Nelson, thank you again for convening this important

meeting today. Please let us know if we can provide additional

input regarding this dismal situation.

[The prepared statement of Mr. Vorderstrasse can be found in

the appendix on page 104.]

Senator NELSON. Thank you, Jim.

We now have Mark Schweers, President of Nebraska Corn Growers Association. Mark.

STATEMENT OF MARK SCHWEERS, PRESIDENT OF NEBRASKA

CORN GROWERS ASSOCIATION

Mr. SCHWEERS. My name is Mark Schweers, and I am president

of the Nebraska Corn Growers Association. I raise irrigated and

dryland corn and soybeans near Wisner. I am here today representing dryland crop producers from across the State.

First, I would like to thank Senator Nelson for his time and effort in addressing this serious challenge facing farmers, ranchers,

and our country. I am sure by now you are well aware of the magnitude of this drought and its effects. As with any major disaster,

there is no quick, concise answer, no silver bullet to fix all the

problems, but, rather, a series of steps to begin the rebuilding process.

I would like to offer some broad ideas on that disaster package,

and then focus on specific areas of crop insurance and the effects

of the drought on the livestock industry.

There are several proposals that the Senate and House have

under consideration. Each has strong points and weaknesses. Perhaps the toughest question is how to pay for a disaster package.

I believe that this type of natural disaster, which has a broad effect

on our whole economy, should have the same consideration as other

catastrophes that affect our country. Therefore, emergency spending should be adequate to repair the economies of these drought

areas.

We have all worked long and hard to develop the 2002 Farm bill.

The concern with offsetting funds from the budget before we have

begun to implement the program raises questions for which I am

having a difficult time finding answers. It is assumed at this time

27

that counter-cyclical payments and LDPs will not be needed this

marketing year.

Some of the suggested programs have looked at the use of these

savings to fund a disaster package. The Congressional Budget Office will need to conduct a thorough review of the status of these

payments in regard to their scoring against the budget. Areas that

should not be considered in any potential offset are those that affect the future budget of these safety net programs and the new

loan rates.

I would also like to address specific areas that should be considered in any disaster package, the first being crop insurance. I have

a few points that I believe we need to keep in mind as we look at

disaster aid and the interest in maintaining a viable crop insurance

program.

We need to be sure that producers who have utilized risk management be rewarded for their decisions more than those who

choose not to use crop insurance. The protocol that some are considering would result in a noninsured acre receiving 95 percent of

the potential disaster payment compared to the insured receiving

100 percent. This is an unjust spread that rewards those who do

not utilize crop insurance and penalizes the producers who use risk

management programs. I would like to offer the idea of a difference

of 30 percent between the payments to insure the incentive necessary to maintain participation in the crop insurance program.

Many of the proposals being considered require producers who do

not have crop insurance and receive disaster payments to purchase

insurance in future years. I support this concept. I would also encourage you to look at increased participation and at levels of these

requirements so they fit the goal of maintaining a viable crop insurance program and not result in minimum token policies. Those

determined levels should be high enough to differentiate between

producers who are willing to manage risk with crop insurance and

those who choose to forgo disaster payments and remain self-insured.

Another concern is that, under a scenario that may unfold this

year, many producers who carried the high levels of insurance may

reach a cap and will have to forgo payments. We should not penalize these people, but make some type of an adjustment so using insurance does not create a disservice. A possibility may be to raise

the cap or to refund premiums.

The other area I would like to focus on is support of the livestock

community, which I believe has been hard hit by this drought.

They are not only corn and soybean producers’ largest customers,

but also our neighbors in our communities. Their future is directly

correlated to our future.

Several efforts are under way in Washington to provide resources

and support to producers, and I applaud this work. I would urge

you to move as quickly as possible to address the needs of the livestock industry.

One specific area that I would like to touch on is the consideration of extending the tax deferral time from 2 to 4 years to livestock producers that have been forced to liquidate part of their

herds. In many cases, herds have been reduced by over 40 percent,

28

and some entirely. This loss, along with the tax burden, may be insurmountable for many operations to survive.

There are many more ideas that are under consideration. I encourage you to explore each on its own merits and long-term consequence. I hope that over the upcoming months we can work together in these many areas that will help agriculture, our economy,

and our country work through these challenging times.

Thank you.

[The prepared statement of Mr. Schweers can be found in the appendix on page 107.]

Senator NELSON. Thank you, Mark.

Now, Keith Dittrich from the American Corn Growers Association. Good to have you here, Keith.

STATEMENT OF KEITH J. DITTRICH, PRESIDENT, AMERICAN

CORN GROWERS ASSOCIATION

Mr. DITTRICH. Thank you, Mr. Chairman, and members of the

committee. On behalf of the members of the American Corn Growers Association, I would like to thank you for the opportunity to

provide our viewpoint of this organization to this esteemed committee concerning the impacts of these natural disasters on American’s

farm and ranch families.

I am Keith Dittrich. I am president of the American Corn Growers Association and a Nebraska corn producer.

In a normal year, about 12 percent of the U.S. experiences a

drought of some type. This year, however, according to the U.S.

Weather Service, about 52 percent of the country is facing drought.

This is no small pocket of minor discomfort. This is an extremely

serious and widespread disaster.

Recently, I had the opportunity to travel from Omaha to southwest Oregon through Denver. From the air—I was lucky to have

clear skies—I saw only brown the entire route except for irrigated

fields, and when I got to the end of my travels, I was met with a

forest fire of historic proportions in Oregon in the southwest part

of the State covering 450,000 acres due to drought. I just wanted

to mention that.

You have heard many times today that Nebraska is facing a very

devastating drought. I would agree. Right now Nebraska is projected to produce nearly 20 percent less corn, but, as we may find,

as we did in 1995, by the end of the crop year, the final statistics

showed that national average corn yield was another 12 bushels

lower than the August 12th crop report. We do not know what will

happen, but we fear that could happen again.

Under the new Farm bill, current crop prices, though improved,

will result in very little gain per bushel over income received in

2001 from all sources. Therefore, the projected production losses

will translate almost directly into an equivalent gross income loss.

Many of these losses will not be recovered from Federal crop insurance because of the deductible. A decrease in gross farm income of

this magnitude is devastating to a producer, especially since in

May, before any crop losses, USDA forecast that income from farming to farm operator households would be negative in 2002. That

is USDA’s statistics.

29

The old-timers say that the 1930’s, which has been touched on

today as reflecting to the drought—would not have been so bad if

it would not have been for the 1920’s. The 1920’s were a time of

very difficult economic times in farm country, and looking at today,

we can say that that could be the case here. We spent the last decade and a half in an economic turmoil in the country relating to

agriculture, and farmers just do not have the means necessary to

supply this drought without income assistance.

Congress has provided disaster legislation, and the President has

enacted disaster laws covering every crop year since 1988, with the

exception of two, and three if we count 2001. Today, we seek assistance for the 2000 crop as well as the 2002 crop—I said 2001 as well

as the 2002.

Nebraska had many losses in 2001, prior to the devastation of

this year. For example, just 50 miles south of my farm, the Fullerton area has had severe drought and produced virtually no dryland

crop in 2001.

Therefore, many farm and ranch families need assistance due to

disasters that occurred in 2001. Many more need assistance for

2002, and there are those who have been hardest hit by this disaster in both years.

As you move forward with this legislation for both years, please

make sure that if a producer qualifies for assistance in both years,

that they are eligible for benefits for both years. It would be extremely unfortunate to discriminate against those who have suffered two consecutive years of drought.

We also need assistance for livestock producers. We are leaning

too much on CRP haying and grazing as the program of choice for

emergency livestock assistance. We also must insure that those few

standing programs remaining for disaster are properly funded,

such as the Emergency Conservation Program and the American

Livestock Feed Assistance Program.

Finally, funding. Funding of a 2002 disaster program should be

adequate to avoid any proration of payments in the event the need

exceeds the initial estimates. This not only provides the essential

level of program benefits, but it expedites the distribution of those

payments.

We also are vehement in our opinion that funding for a 2001/

2002 disaster program should not come from cuts or offsets from

a recently passed farm bill. This is a disaster, and funding should

not be at the expense of other essential programs. Even though

there is $200 billion of agricultural activity in the country, only

about 25 percent of that is covered under the Farm bill. We cannot

ask that the rest of the 75 percent be pulled out of that farm bill.

That just does not seem fair to us.

Finally, we find that—we are to understand that those wishing

to find offsets in programs for disaster assistance would take all of

the offsets out of one-fourth of the production agriculture economy

to redistribute to the other three-fourths.

In future years—and I will close—we propose an examination of

a standing disaster assistance program and a reestablishment of a

farmer-owned grain reserve to protect our livestock and ethanol industry, which we fear could be devastated if we end up with severe

shortcomings in crop production.

30

I thank this committee. I will offer my expanded remarks for

written testimony, and I appreciate the time here today.

[The prepared statement of Mr. Dittrich can be found in the appendix on page 109.]

Senator NELSON. Thank you, Keith.

Now, we have Ron Stoddard, who is the Executive Director of the

Nebraska Wheat Board. Ron, good to have you here.

STATEMENT OF RON STODDARD, EXECUTIVE DIRECTOR,

NEBRASKA WHEAT BOARD

Mr. STODDARD. Senator Nelson, my name is Ron Stoddard, Executive Director of the Nebraska Wheat Board. I want to thank the

Senate Ag Committee for holding this committee hearing in Grand

Island today in order for agricultural producers, agricultural suppliers, financial lenders, rural retailers, and others to have an opportunity to express their concern about the severity of the drought

conditions present across Nebraska, in particular, and the Central

Plains area, in general.

Nebraska, like our neighboring States, is an agricultural State

deriving a majority of its gross national product directly from the

production of agricultural crops and livestock. I have personally

been involved in production agriculture in Nebraska for the past 40

years, and I have never seen a year as severe as 2002 is proving

to be.

It is spooky to drive across the country and see one field after

another severely damaged, if not nearly dead, from lack of moisture. Most of the irrigated crops are also suffering severely because

it has been impossible to provide these crops with adequate water

due to no rainfall and abnormally high sustained temperatures.

The few crops that have somehow withstood the drought conditions are the feasting grounds for a huge influx of grasshoppers.

When we look at the rangeland, one would think it was mid January if it were not for the 100-plus-degree temperatures.

Grass has been nonexistent in the major cow/calf region all year.

Due to the inadequate levels of soil moisture, the grass never attempted to green up this spring and is still as dormant today as

it was last March. Several ranchers have been forced to either sell

part, if not all, of their herds or haul them to expensive grass several hundred miles away.

Let us talk about wheat issues in specific. Nebraska had mixed

results in wheat production this year. Much of the wheat produced

east of Grand Island had yields as good, if not better, than in recent years. There were several reports of dryland yields of 60 to 70

bushels per acre. However, the fallacy is that only 11.2 percent of

Nebraska’s wheat is raised east of Grand Island.

The area from Grand Island west got progressively drier the farther west one goes. The common harvest yields this year in that

area, west of Grand Island, would be in the 10-to 25-bushel-peracre range.

This year’s Nebraska wheat harvest of 46,400,000 bushels is 22

percent smaller than last year’s crop, and the smallest since 1944.

This compares with the past 5-year average of 70,660,000 bushels.

The June 2nd crop report released by Ag Statistics reported that,

at that date, the top soil and subsoil moisture levels across the

31

State of Nebraska were rated mostly short to very short in the

major wheat-growing areas, and the crop conditions were rated at

62 percent poor statewide.

Moisture conditions continued to decline during the following

month leading up to wheat harvest. The August 12th crop report

from Ag Statistics showed subsoil moisture levels at 93 percent

short and very short, which is the lowest level since 1974, and the

report that I read this morning shows that the percentage is now

97 percent.

The financial status of Nebraska’s wheat producers was extremely fragile prior to this year’s drought. It is encouraging to see

wheat prices increase to levels around $3.80 per bushel, almost $1

per bushel higher than 1 year ago. However, price is a nonissue if

you do not have any production to sell.

This year’s production was 12,800,000 bushels less than the 2001

crop year, which was not a banner crop year either. With wheat

prices at $3.80 per bushel, the loss to Nebraska’s wheat producers

is $48,640,000. A dollar generated at the producer level will turn

7 times through the economy reflecting a loss of $3,404,800,000 to

Nebraska’s economy.

The Nebraska Legislature just completed a second special session

in order to balance the budget for this fiscal year. Over $100 million was cut out of very worthy programs and projects. The legislature may well need to hold other special sessions in order to keep

the State’s budget in check if this drought continues.

Nebraska wheat farmers, as well as all agricultural producers,

desperately need Federal assistance in order to withstand this economic devastation. The designation of Nebraska as a statewide disaster area is of great importance because it facilitates the opportunity for producers to apply for low-interest loans.

In addition to low-interest loans, our farmers will need a strong

Federal crop insurance program and assistance with obtaining crop

input for next year’s crops.

I thank the Committee for this opportunity to make these brief

comments of behalf of Nebraska’s wheat producers. I believe that

together we can survive, and Nebraska will continue as a strong

wheat-producing State.

[The prepared statement of Mr. Stoddard can be found in the appendix on page 117.]

Senator NELSON. Thank you, Ron.

Next, we have former Senator Lee Klein, who is the immediate

past president of the National Corn Growers Association. We appreciate having you here, Lee.

STATEMENT OF LEE KLEIN, IMMEDIATE PAST PRESIDENT,

NATIONAL CORN GROWERS ASSOCIATION

Mr. KLEIN. Thank you, Senator Nelson, and thank you for being

here today.

As you said, my name is Lee Klein. I am a farmer from Battle

Creek where I grow—when there is rain—corn and soybeans and

hay. I am the chairman of the board of directors and the past president of the National Corn Growers Association, the Nation’s largest

corn grower organization.

32

Senator, it is dry. You know that, and a lot of farmers in Nebraska and other parts of the Corn Belt are hurting. After the low

prices of recent years, this disaster hits us hard.

The previous panelists have pointed out the severity of the problem. The question is how to mitigate it.

Yesterday, I stopped at a neighbor’s place where trucks were unloading 300-plus cows that they were bringing home early from

pasture. Ten days ago they brought home the calves from those

cows. His cost per pen in the pasture was less than 90 cents a day.

It was very close to that. Today, his cost, without labor, to provide

feed for them is $2.10.

Also, I remind you that the retired Knox County rancher, where

they pulled these cattle from, got three-fifths of his rent for the

year. There are going to be a lot of culled cows, and it takes 7 years

to repopulate a cow herd.

I am in the business of selling corn without cows to eat it, without hogs to eat it, without the poultry to eat it. We are in trouble.

I mean, PETA would be happy with what is going on.

Finally, the NCGA strongly recommended the immediate establishment of the task force to conduct comprehensive evaluation of

the losses caused by drought conditions over the last 2 years. We

believe it is important for the Department to receive input from affected producers as to the extent of the drought, its effects, and

practical actions for the mitigation. Such an entity would be worth

value to both producers and the USDA. We hope to hear from the

Secretary soon. Sadly, the USDA has inherited a lot of work regarding the Home Security Act.

Assistant Secretary Moseley told me in his office a while back

that he and his staff are spending over 80 percent of their time

working on this issue. Secretary Hawks, who works on the regulatory issue, said that his office is spending a lot of time with that.

I believe this has caused the droughts to be, literally, put on the

back burner, if you do not mind the pun. The reason we have not

seen some of the administration jumping in line on this is the fact

that their people that would have been out looking at this have

been tied up on other issues.

The National Corn Growers Association has established its own

disaster task force comprised of producers from areas suffering

from drought and from the areas blessed with rain. Our decision

to appoint a task force was a result of collaborative efforts between

NCGA and grower leaders from State corn grower and checkoff organizations.

The mission of this task force is to make sure that clear, timely,

and accurate information on the impact of the disaster situation

gets to policymakers and program implementors. The other thing

is to share information between growers in States on assistance

programs and options to assist crop and livestock producers in responding to the disaster, and to set a course of further action for

national corn growers with respect to disaster response. Our task

force will meet by phone again tomorrow to discuss and take action

on this issue.

Senator you have supported the recently enacted farm bill. We

applaud your support. You share with us the concern that any disVerDate 11-MAY-2000 14:57 May 12, 2003 Jkt 086217 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 86217.TXT SAG1 PsN: SAG1
33

aster assistance might come from farm program funds. We strongly

oppose funding disaster relief from current USDA programs.

Recent Federal assistance to victims of hurricanes in Florida did

not come from Florida’s share of Federal transportation funds—I

robbed that from you—nor did payments made to Western States

suffering from wild fires come from Federal funds otherwise budgeted to them.

Again, we do not believe that disaster aid should come from socalled savings from reduced payments due to higher commodity

prices or any other change in the Farm bill. Once that happens, I

believe the final things that can happen might be funding the

World Trade Center out of reduced expenses. We are not interested

in that at all.

We are also concerned that this disaster might be used as an argument against the renewable fuel standard you worked so hard to

get adopted in the Senate energy bill.

True, we are talking about a major drought having serious impacts on farmers and ranchers in many States. However, I want to

point out that we will have a corn crop exceeding 8.7 billion bushels. There is and will be plenty of corn to produce ethanol.

This disaster has a human face for many in agriculture, but the

strength of our American agriculture ensures our ability to meet

the challenge of being part of the solution for our Nation’s energy

problems.

The solution for assisting those suffering from this drought will

not come easily. The producer members of the National Corn Growers Association pledge to you, Senator, and to our friends in Congress and the administration our commitment to working toward

an equitable policy that assists those who need help, and preserve

the programs so important to farmers and ranchers in our rural

communities.

Finally, as you pointed out, Senator, loans are not always the answer. Let me tell you, this disaster will be the proverbial straw

that broke the camel’s back. We will be losing more producers, and

some of them will not even realize the long tail that exiting production in agriculture will have.

We allow a no-tax liability on $500,000 worth of selling a home

to a couple that have owned it for 5 years and lived in it for 2, but

not to the individual who quits farming. After the banker extracts

his share, come March the IRS will be waiting with open arms.

I ask you to please grant an exemption to those people so they

can get on with their lives. If we can give a $500,000 exemption

in income to a homeowner, why can’t we do $250,000 exemption for

people forced out of agriculture?

Thank you, Senator.

Senator NELSON. Thank you. I thank the panel for the very appropriate presentations from your organizations.

As I think about the question about getting something accomplished in a timely fashion, and with an emergency so that we can

do it immediately, is there anyone who feels that we ought to wait

to see if you can get some offsets, even if they were outside the

Farm bill?

Lee, you have spent enough time in Washington. You visit our

office on many occasions when you are back there in your role as

34

the president of the National Corn Growers Association. Do you

have any thoughts about what the effort to get offsets might involve, in terms of timeframe?

Mr. KLEIN. Well, I don’t think there is time, especially for the

cow/calf producer. Like I said, it takes 7 years to rebuild a herd.

I honestly, Senator, do not think that there needs to be an offset

on an emergency funding basis. It was pointed out by one of the

panelists earlier. John Hansen said that the Senate version had an

emergency assistance package in it. It got buried in the conference

committee. If we are going to that, it needs to be budgeted for

ahead of time. I do not want to see that farm bill opened up.

Senator NELSON. Any other thoughts from the rest of the panelists?

Mr. DITTRICH. Well, Senator, I am very concerned about offsets

also, and we strongly oppose any offsets. We do not think that is

necessary. I am concerned that it is possible that there is an attempt to really undermine the integrity of the Farm bill by using

offsets to cut loan rates, for example.

The question is: Where are you going to take them? Are you

going to take them out of the counter-cyclical payment? Is that not

going to be needed this year?

We do not know yet. We do not know where market prices are

going to go. We hope they go hope. They should go up. The past

2 days corn has been down 10 cents the last time I saw it, about

noon today. We just do not know. We are very concerned about attempting to use any of those offsets.

As you mentioned, CBO will have to score some—if you are going

to take money out of the farm program, they are going to have to

score it by taking away funds and taking away from program benefits. That is how they will do it. It really will work.

Senator NELSON. Any other thoughts from the panelists?

Mr. SCHWEERS. Well, I guess I just echo much of Lee’s comments.

Once you open up that farm bill for offsets, we do not know what

else is coming down the line. It is just going to open it up for other

people to raid into the Farm bill. We also do not know what is

going to happen in the future. That is our safety net, and we want

to leave that intact.

Senator NELSON. Jim.

Mr. VORDERSTRASSE. As far as counter-cyclical payment, the

CBO—when they score it—they figure money saved in 1 year will

possibly be used in the next year, if there is more money needed.

If we start taking it out of this year when we do not need it, down

the road we are going to run short and be left standing with nothing.

Senator NELSON. Well, Ron, I will not leave you out in case you

had some thoughts you would like to give.

Mr. STODDARD. Well, Wheat certainly agrees with the panel here

that the farm program should not be opened up again and that offsets should not be used as way of funding disaster.

Disaster is needed immediately and, as mentioned before, the

cow/calf guy is probably hurting more than the wheat producer is,

although most wheat producers are a cow/calf producers as well.

Senator NELSON. For many of those producers, when we say now,

in their mind it is already yesterday.

35

Mr. STODDARD. Yes.

Senator NELSON. Immediate, right away, emergency—all those

words mean—even though we are trying to do it as quickly as we

can, it is still a delay for many of the producers. No matter when

we get it done, it is not soon enough in many cases.

Well, I thank you very much. I appreciate it. Very enlightening.

One of the things I wanted to do here is—I neglected to introduce

the folks who are up here supporting me.

First of all, most of you probably already know Dale Williamson,

who is the head of the Natural Resources Commission and Office

under six Governors, including myself. I have always teased Dale

about his age. As a retired general, he has been around just a little

while. Just the other day he was telling me about how bad the

1920’s and the 1930’s were.

[Laughter.]

Mr. WILLIAMSON. I have a tractor for sale, too.

Senator NELSON. Oh, and he has a John Deere tractor for sale.

It runs good, but it is missing the steering wheel and seat. It is

ideal for the person who has lost his backside and does not know

which way to turn.

[Laughter.]

Senator NELSON. He thought he was going to get me on that.

Then we have Betsy Garbucz who is working with us. Ben Hanson, who is are legislative assistant, who has recently joined us

from Superior. He has some family here. We are very happy to

have him. Then Stephanie Mercier, who is from Senator Harkin’s

staff, through whose courtesy and support we are able to have this

committee hearing here. We appreciate very much her invaluable

assistance to us along the way.

Now, having said all that—— Mr. WILLIAMSON. Senator, we also have Mary Crawford with

Senator Hagel’s staff. You couldn’t see out there. Mary, are you out

there?

Senator NELSON. Here we are. OK. Thanks, Mary. We appreciate

your being here.

I have some items I would like to introduce in the record. I would

like to submit the letter from Pam Potthoff of Women Involved in

Farm Economics—WIFE—as they support S. 2800, no offsets, as

well as a collection of letters written by members of the United

States Custom Harvesters, which we will make all a part of the

record for this hearing.

[The letters of Ms. Potthoff and members of the U.S. Custom

Harvesters can be found in the appendix on page 121.]

Senator NELSON. Now, we are having a potpourri group of panelists for the fourth and final panel today. As they are preparing to

get situated—they are going to be batting cleanup. If it has not

been said, they are probably going to say it, but if it has been said,

they are probably going to say it again. We appreciate you very

much for being here today.

First, Dale Dueland from McCook, whom I have known from the

time that he was crawling on the floor of his parents’ home many,

many years ago. He says that he is a dryland farmer from McCook.

It almost seems like an oxymoron to say you can be a dryland

farmer today under these conditions.

36

Dale, we appreciate your being here. Please give us your

thoughts.

STATEMENT OF DALE DUELAND, FARMER, McCOOK,

NEBRASKA

Mr. DUELAND. Thank you.

As the Senator said, my name is Dale Dueland, and I live in

McCook, Nebraska. I manage and operate a diversified family farm

in nearby Frontier County, which includes land that my greatgrandfather homesteaded in 1890. I have operated this farm since

graduating from the University of Nebraska in 1976, and also have

had several years of part-time work experience in ag finance and

farm and ranch real estate sales. I currently serve as director and

officer of our local farm cooperative and have for the past 10 years.

According to the McCook Daily Gazette, last Friday was the 35th

day this summer of a daily high temperature of 100 degrees or

more. This is, unfortunately, very close to the record of 37 days

back in 1936.

I might add, this morning they were forecasting 100-degree temperatures for the next 2 days as well. That record is within the target, and we could be over that by the end of the week.

As of Friday, McCook had recorded 8 inches of rainfall for the

year. That is one-half the normal, with most of the shortfall occurring in the last couple of months. Our farm has received just onehalf inch of rain since late June.

The extreme heat, coupled with lack of rainfall, has devastated

the dryland crop production in our area. Just last Friday, our crop

insurance adjuster appraised our nearly 900 acres of dryland corn

at a zero yield, something a few weeks ago we would never have

thought possible due to drought.

Our normal annual rainfall usually does not provide excessive

moisture. In 1981, we adopted conservation farming practices to

conserve every drop of rainfall we receive. It has served us very

well over the years, as I do not recall ever in my farming career

having a crop insurance loss claim due solely to drought. We have

had a claim occasionally due to hail, but not drought. We thought

we had a fairly bulletproof plan to produce crops up until now.

Our long-term dryland corn yield averages are 80 to 90 bushel

per acre, generating normally about $200 gross revenue per acre

from grain sales. Multiperil crop insurance coverage, which we

have purchased as long as I can remember, will produce a little

over $100 per acre, leaving us about $100 an acre short. Now, this

totals close to $90,000 of uninsured lost income from our dryland

corn crop alone.

It does not end there. When you add losses from our cattle operation due to lighter calf selling weights and higher feed costs, and

add losses from the irrigated farmland due to reduced production

from heat stress and higher pumping costs, our total uninsured

farm losses for our operation should easily enter the neighborhood

of $200,000.

Multiply this times the number of full- and part-time family

farmers in our area, and you realize that this has enormous consequences, not only for the farmers, but also for rural communities

that supply farmers with goods and services.

37

I have many friends in McCook that are small business owners,

and I depend on them to keep my farm running.

As you can see, losses of this magnitude test the financial

strength, management abilities, and emotional fortitude of the families who operate the farms. The combination of low crop prices the

last few years and an accumulating effect of drier weather patterns

in our area are pushing many farm operations to the brink.

In spite of larger price support payments the last few years,

many operations have operated at breakeven, at best, and will have

a very difficult time producing profits to overcome these shortfalls.

With losses accumulating as quickly as I mentioned above, even

farm operations that were strong financially can have their equity

positions quickly diluted.

This drought is a disaster. It is as severe and as much of a disaster as any flood, tornado, hurricane, or earthquake that you could

imagine. It has been sinister. It has tempted and teased us for 2

years with moderate dry spells, and this year unleashed an unbelievable 90 days of extreme heat and dry to scorch the earth.

Multiperil crop insurance has been a great help to our operation.

We have purchased CRC coverage at the basic levels and are comfortable with the risk that we have assumed. It is good coverage

at a reasonable cost.

Our area is about one-half rangeland, and cattle are a large part

of our farm and ranch incomes. The Livestock Assistance Programs

are needed and should be closely examined to assure that they provide appropriate assistance in a fair and responsible manner.

Regarding the EQIP program, I would suggest that additional or

reallocated funding for EQIP in the drought area be considered.

This program has been short-funded the past few years, and there

has been a backlog of projects to be completed. These projects stop

soil erosion, aid rainfall conservation, promote efficient livestock

grazing, and promote irrigation efficiency conserving the high

plains aquifer. They are private/public partnership projects that

will help the farmers battle the effects of the drought.

Our farm is in the Middle Republican Natural Resources District.

At their monthly meeting last week, the McCook newspaper reported there were 192 applications requesting $3 million in cost

share funding for EQIP projects districtwide. These are projects

that the district conservationist has reviewed and deemed worthy

of funding consideration. The current allocation of funding for those

projects is $496,000. At this rate, it would take 6 years to work

through the list, not counting any new applications.

Another thing to consider here is most these projects require contractors and other supply items from local communities. This would

be a way to boost these businesses and rural development as well.

I submit these projects will most likely not be done without EQIP

cost share, as financial pressures from the drought will prevent

farmers from spending money, which brings me to the last area I

want to touch on, the money issue.

When my banker and farmer friends heard I had been invited to

come here today, they commonly offered one request, half serious

and half tongue in cheek. The request was: Just tell them to send

money. Don’t we wish it were all that simple.

38

Even with the insurance proceeds and direct Government assistance, it will be a long time before farmers and ranchers recover financially from this drought. I do not think any farmers or ranchers

I know expect to be made financially whole from the Government

assistance. They expect risk in agriculture and take steps to reduce

their exposure to it. Not to recognize that risk can be financial suicide.

One thing we generally do not need today in agriculture is more

loans, especially Government or private loans that are made irresponsibly. I would not encourage a large Government direct loan

program to counter the effects of the drought. I feel we must offer

as much direct disaster aid to producers that we can practically afford and rely on the banking and credit system we have in place

to manage the rest of this problem.

Generally the system is very good with adequate capital and personnel to service agriculture. Ag bankers know their customers and

their credit capacity pretty well and would be the best judge to administer any financial restructuring that may be needed.

For the most part, this has been a hot, frustrating summer for

producers. In a normal year, we would be enjoying a late summer

break, appreciating the growth and progress of the summer crops,

and looking forward to a fall harvest that would have rewarded us

for a spring and summer of hard work.

Normally, in the fall, including some harvesting we do for neighbors, we would run our combine over about 2,000 acres of crops. It

looks like this year we will harvest about 350 acres of irrigated

crops that will produce maybe a half to two-thirds the normal yield.

The other roughly 1,700 are at zero yield. At first glance, it does

not look like there will be much to do.

For me, though, it feels like the work is just beginning. We will

have to break out of our routine and make a number of different

decisions which have important consequences for our future.

We may be witnessing just the first chapter of this drought, and

I hope and pray that we are not. At the moment, there is no indication that there is a big rain coming, but if it did, we would still

not see much effect until the growing season of 2003.

Immediate rains would get the wheat crop off to a good start and

would charge soil moisture reserves for a corn crop next summer,

but there would not be much help for feeding the cattle herd. In

fact, a cold, snowy winter would actually cause more expense in

feeding and caring for the herd.

A continuation of the drought will certainly drive production

losses and producer despair deeper. Today, looking into the future,

it appears we will lose complete grain and pasture crops until this

drought breaks.

This outlook does not encourage those businesses in our rural

communities either. Please understand and do not forget that they

are very dependent on dollars flowing through the agriculture economy. Their financial future is directly tied to the outcomes of the

drought and governmental assistance. It is important to remember

that not only our farms’ but also our rural communities’ welfare is

at stake here.

Thank you for the opportunity to share my views.

39

[The prepared statement of Mr. Dueland can be found in the appendix on page 131.]

Senator NELSON. Thank you very much, Dale.

Jeremie Kerkman, from the Central Nebraska Public Power and

Irrigation District. Jeremie.

STATEMENT OF JEREMIE KERKMAN, ON BEHALF OF THE

CENTRAL NEBRASKA PUBLIC POWER AND IRRIGATION

DISTRICT

Mr. KERKMAN. Thank you, Mr. Chairman.

My name is Jeremie Kerkman, representing the Central Public

Power and Irrigation District, and I will discuss the conditions in

the Platte River Valley.

The North Platte River, the Platte River, and associated reservoirs supply irrigation water to approximately 608,000 acres in

Nebraska. Surface water irrigators in Nebraska’s Platte River Valley from the Wyoming border to Kearney rely on a combination of

precipitation, naturally occurring flows in the river, and water

stored in Wyoming reservoirs and Lake McConaughy to meet the

demands of their crops. The lack of rain and low river flows have

placed unsustainable demands on storage supplies in Lake

McConaughy.

Flows in the Platte River have been low since June of 2000, and

record-low flows began to occur in mid-April of 2002. Cumulative

inflows to Central’s system of canals and reservoirs since January

2002 have been less than half the normal inflows. To illustrate the

severity of the situation, the difference between inflows this year

and in a normal year would be enough water to irrigate 150,000

acres.

Irrigators on Central’s system will receive the full amount of

water contracted to them in 2002. However, because of the lack of

precipitation, in many instances the amount of water provided by

their contracts and delivery systems will not be adequate to meet

the full demands of the crop.

Precipitation is needed to provide adequate moisture for grain

fill. Corn grown in Central Nebraska requires 24 to 27 inches of

water to meet the regional evapotranspiration demand. That water

requirement is normally met by a combination of moisture stored

in the soil, precipitation, and irrigation. On average, South Central

Nebraska receives 11.75 inches of rain during the growing season.

This year, rainfall has totaled only 4.6 inches.

The effects of this drought on Lake McConaughy have been

mounting for 3 years, but have now reached a critical juncture.

Lake McConaughy currently contains one-third of its capacity, and

Bureau of Reclamation reservoirs in Wyoming, which are filled primarily with snowmelt runoff from the Rocky Mountains, are extremely low.

Lake McConaughy depends primarily on return flows from upstream irrigation projects in eastern Wyoming and western Nebraska. The amount of water available to the Bureau of Reclamation irrigation projects ultimately affects the amount of water that

finds its way back to the North Platte River and into McConaughy.

With Wyoming’s North Platte reservoirs storing less than 30 perVerDate 11-MAY-2000 14:57 May 12, 2003 Jkt 086217 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 86217.TXT SAG1 PsN: SAG1
40

cent of their capacity, the possibility of McConaughy filling in the

next couple of years is remote.

Central has estimated Lake McConaughy’s ability to withstand

continued drought conditions. At this time, we believe it is very

likely that McConaughy will contain sufficient water to irrigate the

110,000 acres under contract with the Central District in 2003.

However, should drought conditions persist through next summer, the lake could fall to as little as 15 percent of capacity, which

would make it extremely difficult for the lake to recover sufficiently

to meet irrigation demands during the 2004 season.

Central and the producers to whom we provide irrigation water

are making every effort to conserve water resources. Since the

drought of the early 1990’s, numerous improvements have been

made to our delivery system and customers’ on-farm systems at a cost of more than $25 million to ensure that Central’s portion of

the Platte Basin’s water supply would be sufficient to meet irrigation needs.

We have informed our irrigation customers of the current circumstances at Lake McConaughy to encourage conservation and

have reduced releases for hydroelectric power generation. The conservation and education efforts implemented to date have been effective, resulting in a reduced demand for water from Lake

McConaughy. However, the total financial impact of the drought on

producers will not be known until after harvest. It is likely that the

reduction yields and revenues will be significant.

Without a timely end to the current drought conditions and

above-normal snow pack in the Rocky Mountains of Wyoming, the

situation could become worse. Continued drought may very well

interfere with Central’s ability to deliver a normal supply of irrigation water in 2004.

Thank you for this opportunity to provide you testimony.

[The prepared statement of Mr. Kerkman can be found in the appendix on page 136.]

Senator NELSON. Thank you, Jeremie.

Now, Ron Cacek from the North Platte Natural Resources District from Scottsbluff.

STATEMENT OF RON CACEK, MANAGER, NORTH PLATTE

NATURAL RESOURCES DISTRICT, AND CHAIRMAN, NATURAL

RESOURCES DISTRICT MANAGERS COMMITTEE

Mr. CACEK. Thank you, Senator Nelson, for this opportunity to

testify today on the effects of the drought in Nebraska. My name

is Ron Cacek. I am testifying today as manager of the North Platte

Natural Resources District, and also as chairman of the NRD managers committee, made up of the managers of Nebraska’s 23 natural resources districts.

Senator Nelson is familiar with Nebraska’s system of natural resources districts, but for the benefit of the others, let me explain

that the State is divided into 23 natural resource districts known

as NRDs. NRDs are local units of government, each with an elected

board of directors. State law gives NRDs a charge to conserve, protect, develop, and manage the natural resources of this State and

assigns them a broad range of responsibilities and authorities to

carry out this mission.

41

Protecting and conserving groundwater is one of the NRD’s key

responsibilities. Many NRDs can tell you that the current drought

has put severe stress on groundwater across much of Nebraska.

Virtually, all of Nebraska has felt the effects of the drought, but

it has been most severe in the Panhandle. Scottsbluff receives an

average of 14 inches of precipitation yearly. A typical year for us

would be considered a drought in many areas. The year 2002, by

any standards, has been especially dry. Since January 1st,

Scottsbluff has received 3.87 inches of precipitation, according to

the National Weather Service, about one-third of normal amount.

Along with the drought has come extreme heat. June’s average

temperature was 6 degrees warmer than normal, and July’s average mean temperature was 4.5 degrees warmer.

The drought has put extreme stress on the entire system of surface water and groundwater in the North Platte Valley. Several

large reclamation projects on the North Platte River provide water

to irrigate more than 300,000 acres of crops in the Panhandle.

These projects rely upon winter snowpack in the mountains of Colorado and Wyoming, but this last winter there was not very much

snow. The snow that did fall mostly soaked into the soil, and not

much ran off into the streams and reservoirs. This left the North

Platte Project with scarcely more than a third of a full water supply this spring. For irrigators, this has translated into enough

water to last an average of 65 days, when the normal irrigation

time is 122 days.

The North Platte River provides water to protect for appropriators with a priority date of 1884. The last time that administration on the river occurred, back to this date, was about 1954. The

North Platte River is not much more than a trickle.

On June 24th, the Department of Natural Resources measured

a flow of 17 cubic feet per second at the gauge at Lewellen, at the

upper end of Lake McConaughy. This is the lowest flow on record

at this location. The previous low was 44 cubic feet per second,

measured in 1954.

The effects that I have listed so far are visible for anyone to see

the dry river bed, stunted and wilted crops, and scorched grazing

land, but this drought is having other effects that cannot be seen.

It has severely stressed groundwater in the North Platte Valley.

There are several reasons for this.

First, surface water irrigators whose canals dry up will turn to

groundwater to get them through the summer, if they also have a

well. This will obviously result in the pumping of much more

groundwater than a typical year.

A second reason is that most of the groundwater recharge comes

from the irrigation canals. When they dry up earlier than usual,

that means less groundwater available to pump. In other words,

most of our groundwater is recharged from the surface water irrigation projects.

The combination of less groundwater and more pumping has already led to problems for groundwater users. Some counties have

received approval for emergency assistance through USDA to drill

new livestock wells. This assistance has been helpful, but should

have been made available sooner.

42

There have also been reports of cities in Nebraska restricting the

use of water by residents. Since early summer, the NRD has received numerous reports of significant problems with domestic and

livestock wells, and even irrigation wells.

In some cases, the wells that provide water for farm homes and

livestock operations have dried up. The NRD measures water levels

weekly in a number of wells, and we have charted declines in

water levels as a result.

One result of the groundwater problem has been an even higher

demand to drill new wells. So far in 2002, the North Platte NRD

has issued 112 well permits. This is more than the NRD has issued

before in an entire calendar year, and about double the number of

permits issued in most years.

In conclusion, it is becoming clear to us that the drought of 2002

is unprecedented. Longtime residents who can remember the

1930’s cannot remember it being this dry before. The effects have

been severe, and indications are that they will get worse.

Even when this drought has passed, it is likely to take a long

time for surface water and groundwater resources to recover. Steps

need to be taken now to lessen the long-term impacts of this

drought.

Thank you.

[The prepared statement of Mr. Cacek can be found in the appendix on page 143.]

Senator NELSON. Thank you, Ron.

Now we have Al Davis, a rancher from Hyannis. Good to have

you here.

STATEMENT OF AL DAVIS, RANCHER, HYANNIS, NEBRASKA

Mr. DAVIS. Thank you, Senator Nelson. I would like to thank you

for giving me the opportunity to testify this afternoon before the

Senate Ag Committee about Nebraska’s widespread drought and its

economic implications. My name is Al Davis. I am a rancher from

Hyannis, Nebraska, which is small community 60 miles east of Alliance.

This is not the first year of the drought, but 2002 has expanded

the area of dryness, and many believe that Nebraska’s rangelands

are in worse shape today than they were in the Dust Bowl days

of the 1930’s.

A drought is a natural disaster. It is no different than a hurricane, a flood, or an earthquake. In those instances, aid arrives immediately because the damage is visible, sudden, and shocking, and

it draws the attention of the media. A drought is silent and often

ignored, but just as deadly.

In the extremely dry portions of Nebraska, the rancher is out of

options. He needs assistance immediately or he needs to liquidate.

Most ranchers cannot even wait for their traditional bred cow sale

in October to liquidate their herd.

It is my hope that the House, Senate, and executive branches

will move beyond partisan politics to find a quick solution for our

problems. Otherwise, it will be too late for most of us.

The cattle rancher is essentially a farmer, a grass farmer, and

the cow is the vehicle that converts the grass into cash. It is the

cow that pays the bills on a ranch. She makes the land payments,

43

pays the utility bills, buys tractors and pickups, and pays for the

repairs. The cow pays her own bills as well. She pays the feed store

and the vet. She pays wages, housing, and benefits for the workers

who take care of her. If that is not asking enough of the cow, she

must also fund the local government entities through property

taxes. She enables the ranchers to buy goods and services that garner State and local sales taxes.

In fact, the cow is the foundation of the economy in a huge portion of Nebraska, and anything which reduces her ability to prosper has a grave impact, not just on the rancher, but on all Nebraska’s economic entities from State government to rural villages.

If you have been outstate in Nebraska, you have seen the visible

result of the drought. Pasture and forage production is running at

25 to 50 percent of normal. The drought’s old friend, the grasshopper, has exploded in numbers. Reports from Custer County indicate levels in excess of 1 million grasshoppers per acre on some

pastures. That is approximately 23 grasshoppers per square foot.

Most ranchers turn cattle into their summer pastures in May,

knowing that they were short of forage, but hoping for moderate

weather. The weather flipped 180 degrees in June. Hot winds were

common much of the month, and little moisture fell to bring on the

warm season grasses.

July brought unrelenting heat with many communities breaking

records every day. At our ranch, we had our last measurable precipitation on July 6th, when we had 1.5 inches, bringing the total

for the year to 7 inches.

Ranchers follow the seasons in making management decisions.

They move to summer pasture when the grass is growing, move to

winter pasture at the conclusion of the growing season, and begin

supplementing cattle with hay in January or February as their

cows prepare to calve.

Most summer pastures played out in Nebraska in late July.

Ranchers in our area are now grazing their winter pastures, which

normally take place around November 1st. Winter pastures will be

gone in a month, and most of us will be out of options by October

1st, with no grazing available to carry us through to traditional

hay feeding season in February.

While the Hyannis area has received about half the normal

amount of precipitation, the Scottsbluff area is much worse off with

only 25 percent of normal rainfall. Scottsbluff County has never

seen such meager amounts of rain, even during the Dirty Thirties.

Ranchers in the McCook area were weaning calves in June,

months ahead of the usual weaning season in October.

The effects of the moisture deficit will be long-lasting because it

will take an exceptionally wet winter to bring grasses on next

spring.

It is important to view all this with consideration of the fact that

the cattle market has been severely depressed for some time. Bred

heifers sold for $850 to $1,000 last February. Today, this same heifer, with calf by her side, might bring $650 in a livestock auction

barn.

If Nebraska’s ranchers are forced to liquidate herds under these

depressed prices, it is unlikely that many will be able to fully rebuild. Many ranchers have already thrown in the towel and are liqVerDate 11-MAY-2000 14:57 May 12, 2003 Jkt 086217 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 86217.TXT SAG1 PsN: SAG1
44

uidating portions of their herd. Deep culling will eliminate all animals over 6 years old at one neighbor’s ranch. At Angora, several

ranchers are liquidating their entire herds.

Rural communities that are heavily dependent on the ranch

economy will suffer, too. Loans that were fully collateralized last

year may be called this year as the price of cattle declines in response to the drought.

Implement dealers, feed dealers, veterinary supply houses, and

vets will all be directly affected by the drought. Fewer cattle on the

ranch means less money spent for these items.

Ranchers I spoke with offered several suggestions. They include:

One, all ranchers would like to see a revision of IRS rules on restocking after a drought. Current law provides that the operator

must restock within 2 years or pay capital gains taxes on the deferred income. Ranchers would like to see an additional 2 years

added to IRS regulations. Pastures may not fully recover in 2 years

or the drought might continue for an additional period.

As individuals rush to restock, an artificial bubble may develop

in the price of bred cows. Ranchers who pile on debt to repurchase

these cows in an attempt to avoid further capital gains taxes may

be forced to borrow more money than they can adequately service.

Extending the buyback period to 4 years would help keep debt levels low and manageable and would allow for slow and safe restocking, which makes sense from an ecological standpoint.

Aid could come in several forms. During the drought of 1989,

many ranchers were dismayed when hay doubled in price shortly

after USDA announced that it would pay half the cost of purchasing additional feedstuffs. The beneficiaries of Government assistance that year were the producers of hay and roughage, who saw

the price of their commodity double overnight.

Producers I spoke with offered the following suggestions:

Consult with NRCS to determine the carrying capacity of a particular ranch. Consult the rancher’s inventory records to determine

how many head of cattle he is running on that particular ranch,

and then pay the rancher a lump sum amount which is related to

the number of cattle on the ranch, but no greater than the carrying

capacity of that particular ranch. The objective here is to assist all

ranchers, but to avoid reinforcing behavior which is not conducive

to overstocking their pastures.

B, assist the rancher through Federal rebates to local taxing entities who would then lower property taxes for the affected ranchers. This would require the coordination of various levels of government, but would free up money for the rancher to use for feed purchases. In Nebraska, property taxes are often the second largest expense for the rancher, and they are due and payable on the land

even if no cow can survive on it.

C, all ranchers would like to have flexibility to purchase feeds

that most suit their operation. It may be more cost-effective to

move the cows to a feedlot for a few months rather than to bring

high-priced feed into the ranch. This option needs to be available

to the rancher.

An extremely flexible program is needed to meet a variety of circumstances. Ranchers would appreciate your help in emphasizing

45

to urban Senators that the rancher does not receive subsidy for his

normal activities from the Farm bill.

While we would prefer to use money allocated in the 2002 Farm

bill, we all feel that time is running out for the industry in our

area, and extensive wrangling in the Senate and House over where

the money is to come from will be detrimental to the region. Therefore, we would support additional funding above and beyond the

Farm bill, if it is required, and can be delivered in a timely manner.

Finally, Secretary Veneman recently announced a $150 million

assistance program for our area. Surprisingly, local FSA offices

have no information available about this assistance program, although this information appears to be available to the large feed

corporations.

Press releases by the Department of Ag, which are prepared and

distributed before guidelines are compiled, are not helpful, and I

would urge you to consult USDA and request that they immediately develop guidelines for this program.

I appreciate your efforts on behalf of Nebraska’s ranchers, and

thank you for the opportunity to come here today.

[The prepared statement of Mr. Davis can be found in the appendix on page 150.]

Senator NELSON. Thank you, Al.

Now we are pleased to have Vern Steinman, who is the Orphan

Grain Train Volunteer Manager of Operation Hay and Grain Lift,

and he is from Norfolk. Maybe, Vern, you could tell us a little

about that operation.

STATEMENT OF VERN STEINMAN, OGT VOLUNTEER MANAGER,

OPERATION HAY AND GRAIN LIFT, NORFOLK, NEBRASKA

Mr. STEINMAN. Thank you, Senator Nelson, and thank you for

taking your coat off and making me feel right at home.

Senator NELSON. Yes, exactly.

Mr. STEINMAN. I am the only one that did not wear a coat. It was

awful cold in here earlier, and now it is warming up after I am beginning to speak.

I would like to introduce two gentlemen, first of all, who started

Orphan Grain Train. Pastor Ray Wilke and Clayton Andrews started Orphan Grain Train 10 years ago, and it has been providing relief in all kinds of disasters ever since.

I am going to paraphrase my remarks here and just hit the high

spots. I know what Al is going through. We have received over 200

calls for hay. My remarks are going to be made to you to help us

release some more hays that we can get to these folks.

You and I both know that a cow herd survives on hay, but there

are some things we can do and that we have helped do to survive

some ranchers. My remarks are going to be survival remarks.

I harken back to the days of Winston Churchill, when Winston

Churchill said—the town was falling. They were being bombed

every night and everything else, and he said never, never, never

give up.

Our whole issue here with Orphan Grain Train and Hay Lift is

we are not going to give up. We are going to help—we are going

46

to go to the last cow to try to help these folks out with some hay

and grain.

We have an 800 number established to call for hay and to donate

hay. Amazingly, the Maker up above does wonderful things because daily now I am getting calls donating hay.

Senator NELSON. Before you go further, would somebody here

like that 800 number? I know you could gather some hands.

Mr. STEINMAN. We are using a donated cell phone—Orphan

Grain Train works on almost all donations—402–640–5528 is our

Hay Lift number.

Senator NELSON. Now, try that a little bit slower.

Mr. STEINMAN. Oh. I am sorry. I am a Dutchman. I talk fast. I

will slow up.

Senator NELSON. Let us get that number.

Mr. STEINMAN. 402–640–5528.

Senator NELSON. All right. Thanks. I did not mean to interrupt

you, but I thought——

Mr. STEINMAN. That is fine. I like a participatory challenge anyway.

Senator NELSON. All right. Sounds fair.

Mr. STEINMAN. As of this morning, we had 190 people request,

and that is different than you have in your notes because it goes

up hourly. We needed 4,010 ton. We have filled 67 of those requests as of this morning, and we have filled 1,304.4 ton, which is

a fantastic job. Farmers love to help farmers, and they will come

forward, if asked.

We have 24 donors right now that have contributed 1,453 tons.

We are needing a lot more hay to fill the requests that we have.

We appreciate the deadline increase on the CRP. That was to the

end of the month, but that has been moved up until the end. After

out-of-state donations, we have had some calls. We have shipped

some out-of-state hay.

We feel the secret to saving the cow herd, and everything that

you have heard here today, is we have to get them hay. That is all

there is to it. We have to find some way to get hay to these folks.

We can move cows. We have done a lot of that already fellows that

brought cows to eastern Nebraska.

It is amazing your map and my map, down here with the pins

in it—where the donors are, and where the hay is going is exactly

the drought map there. We are so fortunate in northeast Nebraska

that we have been able to catch some timely rains and get some

hay. That has helped us.

I put in there a donator sheet. We verify everybody that calls us.

We call either the Extension Service or the Farm Service Agency

and verify the person says who he is and so we can guarantee the

donor of the hay will be going to a recipient that is in need of hay.

Last week, on August 12th—or 2 weeks now. Time is going pretty fast for an old volunteer like me. I am full-time service now, it

seems like, but still volunteering. We had a meeting last week. One

of the worst things in a disaster like this is the emotional toll on

families. If you could sit on the telephone, as I have done the last

few weeks, and listen—and you know who calls in for hay? That

is the wives. The wives call in and it is an emotional time for these

47

folks. I mean, it is the biggest tragedy that I have been involved

in.

We, as a organized group of churches, went together, and we are

lined up with Nebraska Community Action Organization. We are

lined up with the Inter Ministries. We are providing services for

those in stress that need counseling, and counseling is a big part

of this.

OK. What do we need? We would like to see you look into maybe

harvesting more of the CRP acres. We harvested 50 percent. We

could harvest another 25 percent of those and have very low impact

on the wildlife, we feel, because where we harvest it already, the

regrowth of that harvested acre has been tremendous when we

have some rains.

If you could help us there with getting some more of that CRP— and my understanding was that the Conservation Reserve Program

in the first place was installed for emergencies like this where we

need roughage. We need roughage.

OK. We instituted a grain program where we know that we take

CRP hay it cannot be fed alone. It has to be fed with some energy

source and a protein and mineral source. We have instituted a program where we are asking people to donate grain so we can start

to supply the same producers with grain to supplement the CRP

hay.

We have an excellent organization. I have worked with what I

refer to the old USDA. They have been most supportive. Brian has

really taken a hold on that. The Extension Service has an excellent

point for helping these farmers—how to feed CRP hay, how to feed

cornstalks. We are now initiating a cornstalk program where we

are going to harvest cornstalks and try to get those shipped. Still,

that is where we are coming from.

I will entertain any questions you might have later. Thank you.

[The prepared statement of Mr. Steinman can be found in the appendix on page 159.]

Senator NELSON. All right. I thank you.

Art Duvall, who is a soybean grower, representing the Nebraska

Soybean Association, from Ord. Art, we are glad to have you here.

STATEMENT OF ARTHUR DUVALL, SOYBEAN GROWER, ON

BEHALF OF NEBRASKA SOYBEAN ASSOCIATION, ORD,

NEBRASKA

Mr. DUVALL. OK. Thank you very much, Senator.

My wife Tanya and I have a soybean and corn farm near Ord,

and that is located 65 miles north of Grand Island. I have been a

member of the Nebraska Soybean Association, the Nebraska Corn

Growers, and Nebraska Farm Bureau for many years. I am currently serving as chairman of the Nebraska Soybean Association.

I am also an independent crop insurance adjuster, working with

both hail and multiperil claims.

I am here representing the Nebraska Soybean Association, but

the drought has affected all areas of crop and livestock operations.

I will not limit my comments to just soybeans, since our farm, like

many others in Nebraska, is a diversified operation.

I would like to thank you, Senator Nelson, and your staff for conducting this meeting and for allowing me to have the opportunity

48

to relate to you the drought conditions that we are facing in Nebraska.

I would like to convey to you the drought conditions on my farm,

the drought conditions that I have seen as I travel across this State

and visit with other farmers as a crop insurance adjuster, and the

effect the drought has had, and could have, on my community.

Our farming operation consists of around 500 acres, of which 45

percent is non-irrigated. Since June 7th, for 60 days, we did not receive any measurable amount of rainfall. The temperature was in

the upper 90’s to 100 degrees. We also had many days of high

winds.

I watched as my dryland corn and soybeans withered and then

died. I will not harvest any grain from these fields. Because of the

drought conditions, the nitrate levels in the damaged corn is so

high that it is not safe to graze or hay. My dryland soybeans are

from 6 to 8 inches tall, and I may be able to get some hay off of

these. If you are interested, I have some pictures of my dryland

crops that I would share with you after my comments are over.

Even the irrigated soybeans are much shorter than normal. They

are setting pods, and beans are starting to form. Our average yield

on irrigated soybeans is 50 bushel per acres. I feel that this year

we will be 15 to 20 percent lower due to the extreme heat and

winds.

Our irrigation system, although running full time, could not keep

up with the crop water demands. Most irrigation systems are designed to supplement the normal rainfall and could not apply

enough water fast enough this year.

Also, we normally start watering soybeans when they begin to

set pods, usually around late July. This year we were forced to

start watering over 30 days earlier, which will add a considerable

amount to our production costs.

The irrigated corn is in much the same condition. Extreme heat

during the pollination period has caused a reduced yield. We have

also had a plague of grasshoppers this year. Grasshopper control

has been expensive and, in most cases, ineffective.

The irrigation costs are much higher than in normal years. My

average corn yield is 150 bushels per acre, and similar to the soybeans, I expect to see 15 to 20 percent lower yields this year. This

is on the irrigated ground. I would like to reiterate, on the irrigated

corn and soybeans, our yields will be lower, and our production

costs will be much higher.

I, like most farmers, carry multiperil crop insurance, but crop insurance alone will not be enough. We are in the third year of a

drought. It is more widespread this year and receiving more attention.

In the year 2000, we produced no dryland crops. In 2001, we had

about one half of a crop. This year we will again raise no dryland

crops. We need a drought assistance program to keep our operation

viable.

As a crop insurance adjuster, I have traveled over a large part

of central and western Nebraska. The crop conditions that I see on

my farm are being replayed on farm after farm that I visit. I have

been in hundreds of corn and soybean fields that have absolutely

49

no potential. Some irrigation districts have shut off water because

the lakes and canals are so low.

This is a critical time in grain production, with kernel development in corn and pod fill in soybeans. Having their irrigation water

shut off now will drastically reduce their yields. Farmers have expressed to me that their irrigation costs have been extremely high,

and grasshopper control costs range from $8.50 to $11 per acre.

Most operators have sprayed the borders of their fields several

times, and I have talked to some farmers who have sprayed entire

fields up to three times. I have had several producers tell me that,

without some financial assistance, they may not be farming next

year.

The alfalfa crop was also very short. Most producers harvested

a fair first cutting, but between the drought and the grasshoppers,

second and third cuttings were greatly reduced or not at all.

Ranchers are also facing a very serious situation. Pastures are

completely gone. They have been forced to wean calves early, and

reduce their cow herds dramatically. The normal 5-month grazing

season has been reduced to 2 or 3 months, and if they can find hay

to buy, it is very expensive.

As I visit with area agricultural businesses, they are concerned

that the full effects of the drought on their business have not been

felt yet. When fall arrives, and harvest is complete, farmers’ cash

income may not allow for any nonessential purchases.

Area bankers have expressed concern that when loan renewal

time comes, generally mid-winter, the farmer may not have enough

funds to pay these loans off.

I hope I have relayed to you the conditions here in Nebraska. I

know that I have painted a bleak picture, but the situation is

bleak. This drought is a natural disaster, just like a hurricane,

flood, tornado, or forest fire.

The victims are the hard-working farmers and ranchers, the agricultural businesses, and the communities, and eventually everyone

in this State.

As I visit with the older generation of Nebraskans, they tell me

that this year is drier than the 1930’s. If it were not for irrigation,

we would be living in a desert.

As you contemplate your decisions, remember that a healthy agriculture economy is essential to a healthy economy, not only in

Nebraska, but also across this entire country.

My farm, the area farmers that I work with, and our rural communities need a drought assistance program. I invite you to come

with me to area businesses and see the look of concern on their

faces as they talk about the impact this drought will have on them

and their communities. I invite you to come to my farm and walk

through my corn and soybean fields. I welcome you to ride along

with me for a day as I work with farmers across this State who

are watching their fields and very possibly their livelihood and way

of life dry up and blow away.

Thank you.

[The prepared statement of Mr. Duvall can be found in the appendix on page 168.]

Senator NELSON. Thank you, Art.

50

This is a question to Art. Because of your experience with the

crop insurance program, do you think that participation in crop insurance should be a prerequisite for receiving disaster assistance,

as some have suggested?

I have heard other suggestions as well. Someone said perhaps it

ought to be part of the requirement for disaster assistance.

Mr. DUVALL. Yes, it probably should be a prerequisite. I also do

not think we should punish the people who do have insurance by

paying the ones that do not have insurance the same amount. I

mean, farmers should take advantage of all the risk management

tools available, just not be rewarded if they do not take advantage

of those.

Senator NELSON. Now, I know that cow/calf operators may not be

paying as close attention to the insurance side of it, but, Dale, what

are your thoughts?

Mr. DUELAND. On the same question?

Senator NELSON. On the same question, yes.

Mr. DUELAND. We went through this a couple years ago with catastrophic policies and requirement for eligibility for farm payments, and I understand as a producer of the risks in farming, and

I agree that if producers are not willing to take advantage of some

of these risk management techniques, that they should not benefit

from a payment that——

Senator NELSON. It might be a disproportion, at least, to recognize that you are trying to reward those who take advantage of the

risk management——

Mr. DUELAND. I visited with a farmer the other day, an elderly

gentlemen, and there are not many farmers today that do not purchase crop insurance, but he was one. He is financially well-to-do,

and even his position—he is nearing retirement age. He made the

comment that maybe I should start buying crop insurance after

what he saw this year. Of course, in his lifetime he has never—

his farming career probably spans 50 years or so. He has not seen

this——

Senator NELSON. You were probably suggesting life insurance,

too?

Well, Vern, if we were able to get some transportation dollars to

you, would that help you get the donated hay to the cow/calf operators that are looking for it?

Mr. STEINMAN. To get transportation dollars——

Senator NELSON. Yes. If there was a way to get some

transportation——

Mr. STEINMAN. Definitely would help because it is a huge, huge

problem to transport hay.

We get about 30 of these big large bales on a 45-foot trailer. That

is about 1,300 pounds per bale. To keep some of these cow herds

going, it is going to take a yeoman’s effort. The other problem we

have is—and now alluded to it bringing those cows to eastern Nebraska, that is going to be a transportation thing also.

You are going to need transportation help there to get those cows

moved back to eastern Nebraska or Iowa or—so definitely, Senator,

if you could help us with some transportation dollars—we even

thought about using the National Guard to transport hay for us,

51

if that would be possible. Anything that you can help in transportation would be much appreciated.

Senator NELSON. Well, I appreciate the effort that you are making, and if there is a way that we can find to assist you, I can assure you, we are going to look for it and do it.

Well, I want to thank all of you for your participation here today,

and the information is valuable. It will help us make the case in

Washington. I certainly appreciate your commitment, and we wish

you the best of luck and good fortune in the days ahead. I thank

you very much.

We have time for a couple of questions or comments from the audience. If there is somebody that would like to go to the microphone. I know that we have one gentleman who wants to, if you

would, and if a couple of others would, that would work as well.

If you could put your name and the question on a card, it is

going to be helpful to the court reporter to be able to have that as

part of the record. Then begin, if you would then, by identifying

yourself and then give us the question.

I am not going to offer to answer all the questions that are

asked, but I will volunteer the panelists who remain.

Yes, sir?

Mr. MACINTOSH. OK. My name is Bert Macintosh, and I am one

of the victims of this circumstances. I will try to keep it level here.

I had to liquidate my cows. Everything I worked for for 25 years

is gone. We had quite an extensive panel here that addressed multiple facets of this situation. I do not know if the situation is equal

to or worse than the 1930’s. Obviously, I have not been around that

long. I will tell you, with the circumstances we have in this country, with this drought, with the infestations of the grasshoppers,

with the corporate greed that is ravaging our economy, we have a

major national problem.

Now, we repeatedly elected you as Governor of this State, and

then we sent you to Washington to represent us there. Now, we

pray for you guys, and we pray for guidance for you guys, and I

pray that you guys get together and start looking at this as a real

serious problem, because if we cannot stop the squabbling and the

party bickering and the stalling and all the things that go on in

Washington, which is part of the things that go on there—and I am

sorry that it goes on. If both parties cannot get beyond this childish

behavior and get serious about addressing the problems that this

country has facing us, we are going to be looking at things like

Egypt had when Joseph was there.

Senator NELSON. If you could help me. What things are you referring to as childish? It might be helpful to me.

Mr. MACINTOSH. Excuse me?

Senator NELSON. Well, when you say if you cannot get together

and stop the childish ways, I hope that I am not behaving in a

childish manner by being here and by listening to what you have

to say, and saying I support Senate bill 2800. I am not sure I know

what you mean about the childish ways.

Mr. MACINTOSH. OK. Maybe that was a poor choice of words.

Senator NELSON. Well, no. No. That is all right. There are childish things that happen. I do not——

52

Mr. MACINTOSH. I see the Republican Party balking at things

that the Democratic Party is trying to do.

Senator NELSON. Well, this is a bipartisan bill at this point in

time.

Mr. MACINTOSH. I agree. There is the corporate situation with

the greed and the mismanagement of the corporations, which millions of people in America have had their life savings go down the

drain and my stock portfolio has been devastated, also.

Personally, out of the depth of my heart, these guys need to go

to jail.

Senator NELSON. Well, I agree with you that that is them that

need to go, and I hope they do, and I hope that the prosecution is

carried forth in those cases where they have violated the law.

Mr. MACINTOSH. Anyway, that is what I was referring to, the

constant backing, going back and forth instead of working together

in cooperation. Just like the S. 2800, they mentioned several times

about the provisions, as you had put in there, and then they all got

kicked out in committee because it was a guaranteed veto.

You know that kind of behavior is not looking out for the wellbeing of this country or the people that have invested their life in

raising this country up.

Senator NELSON. I ought to bring those people who kicked it out

up here for you to give them fits.

Mr. MACINTOSH. I would.

Senator NELSON. All right. I believe you would, and you would

be right to do that. Thank you very much, Bert.

We may have—excuse me. Over here.

Ms. DUBAS. Senator Nelson, thank you for this opportunity. My

name is Annette Dubas, and I farm and ranch with my husband

and son in western Nance County, about 35 miles northeast of

here. This is the third year of drought for our region and for our

area around. As we speak, my husband and son are home disking

under our 800 acres of dryland crop because it is not even suitable

for feed. To say that economic conditions are devastating in our region is probably definitely an understatement.

The other day President Bush stated that he is determined to

fund the great priorities of our Nation and our government, and he

says that he will veto any optional spending.

My question is: What is more important to our Government and

to our national security then providing food and fiber for our citizens? Should this be considered optional spending?

This country is blessed with an abundant and safe and inexpensive food supply, and we have this because of the many farmers

and ranchers who work endless hours to feed our country as well

as many other countries around the world.

This severe drought will not only have an adverse effect on our

current food supply, but it will affect future food production also,

because if we do not get financial help to keep family farmers and

ranchers on the land, we are going to lose these people. When we

lose them, they will not be back. With every farmer that we lose,

we are one step closer to becoming a nation dependent on others

to feed us.

This problem does not stop at the farm gates. We will see the

compounding effect on rural businesses in communities. Banks, imVerDate 11-MAY-2000 14:57 May 12, 2003 Jkt 086217 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 86217.TXT SAG1 PsN: SAG1
53

plement dealers, elevators, feed stores, farm supply, and hardware

stores, just to name a few, will suffer. Rural America needs family

farmers and ranchers to drive their economy.

How much is a safe secure food system worth to this country?

Our President as well as many other across this country, think

that the new Farm bill was the mother lode for agriculture, and I

disagree. He believes that there are ample resources available

through the new farm program to fund this disaster, and I disagree

with that also.

This drought is causing an economic emergency in our country.

We are quick to send assistance when other disasters strike, and

this should be no different.

We are asking you—and I know you have supported us, and I

really appreciate that, but we are asking you to make family farmers and the services that they provide to this country a priority in

this economy. This should be considered an investment in our future food supply, not a handout.

We have provided sustenance for this country for several hundred years. If we want this to continue, we need your help. I know

you are there for us, and we appreciate it. We really need Senate

bill 2800 or something very similar to that to ensure our future.

Thank you for the work that you have done for the family farmer.

Senator NELSON. Well, thank you very much. You hit a very important point, and this is what is option spending. I do not think

we have an option here. It is a question of how it is addressed, but

there is no question in my mind it must be addressed.

This is not optional. Occasionally, there is an optional spending

measure that is brought before us that is a good idea that would

help somebody, but it is not the same thing as an emergency. It

is not the same thing as compensating and trying to build for the

future out of a disaster situation. Not saving an industry, such as

agriculture—we have no option. I agree with you.

I hope that that is the message we can take back to Washington

to our colleagues, and also it is a message that can be brought to

the President. Yes?

Mr. NELSON. Yes. My name is Augi Nelson, and I am from

Minden, Nebraska.

Senator NELSON. You need to point out right away that you are

not related.

Mr. NELSON. I am not related.

First of all, I am here representing my customers. I have a small

insurance agency in Minden, Nebraska. Ninety percent of my business is crop insurance, and 85 percent of that business is multiperil

crop insurance. We have a lot of center pivots in our area, and

there is a concern with my customers in regards to the center pivot

issue and dryland corners.

We have a drought in our area, as everybody does. I totaled up

the acres in my agency, which is a small agency. It is about 2,777

acres, and there is $528,000 with $2.32 corn that would be lost

with dryland acres.

The RMA has a rule in the MPCI policy that if you do not plant

the rows in a different direction, you cannot be insured as dryland

54

acres. Therefore, these acres this year will not be payable because

they are planted in those same row directions.

The farmers today have the technology to be able to plant and

change the plant population in those dryland corners without

changing the row direction. Many times in the past in the last 15,

20 years they have left those laid directions. They have ran off

water from the irrigation with decreases of chance of a loss of nonirrigated acres, but this year that is not going to happen.

We have appraised probably 1,000 acres in the last 2 or 3 weeks

at zero bushels on these corners. Many of them are chopping them

for silage for cattle and so forth.

My concern—and I am representing my customers—is that if we

have a disaster assistance program, and we bail these people out

that do not buy crop insurance—and these guys have been paying

premiums for 10 or 15 years on these dryland corners. They are not

going to get paid out of them because the irrigated acres are going

to offset those nonirrigated acres. It is a big concern, and that is

why I am here today.

Senator NELSON. Your point is well made. I hate to put Becky

on the spot, but is there anything you might help enlighten us with

on a couple of those points?

Ms. DAVIS. This is an issue that has been discussed for several

years. You have probably already heard it as well.

You are right. The RMA policy does provide that if you have irrigated acres on a center-pivot system, if you continue that planting

pattern on into your nonirrigated acres then it is covered, but it

cannot qualify as a separate optional unit.

Now, to qualify for separate optional units for irrigated and nonirrigated acres, you have to maintain your records separately for

your irrigated and nonirrigated. One problem that we are seeing

with this, year in, year out, is in a year like this—you are right— acres are and production records are maintained separately, but on

an ongoing, yearly, in a good year, if you are planted in rows that

go straight through, you tend to harvest it straight through, and

you do not maintain your records separately.

One thing that may help is—there is a policy revision. It should

be published in the Federal Register, and it will be open to comment. It would be effective probably for the 2004 crop year at the

earliest, depending on how quickly regulations can clear. It would

allow—if you continue in that planting pattern—but if you can

change your planting on the fly to a nonirrigated seeding rate—

that that may qualify you as changing your planting pattern.

Hopefully, that helps address your concerns.

Senator NELSON. Well, if there is something that we can do to

be helpful in that area, I certainly would volunteer to provide

something. Does that begin to address part of what the——

Mr. NELSON. Well, I guess my question is: If we are going to

have a disaster assistance, and we——

Senator NELSON. We want to make sure that we do not—— Mr. NELSON [continuing]. We bail out these people that have not

had crop insurance—— Senator NELSON. I understand.

Mr. NELSON [continue]. We do not pay these guys that have insured every year, I do not think that is a very good idea, and those

55

people should be given some consideration with those nonirrigated

acres rather than billing out to people that have elected not to insure, have signed a waiver at the FSA office in that case have

elected to self-insure. Where these guys have taken the risk management and purchased crop insurance those people should get

more consideration than—— Senator NELSON. It does raise questions of equity, and your point

is well made, and that will have to be factored in ultimately in how

this settles out.

I am told there is time for one more. Do we have two people who

want to do it? Well, we are not going to shut you off if there are

two of you. We will take both of you.

Yes?

Mr. KALIFF. Senator, I am Bill Kaliff from Grand Island. Senator, I have this question.

Senator NELSON. Yes.

Mr. KALIFF. Why are the resources of the Federal Emergency

Management Administration not being cut loose to help this out?

Senator NELSON. It is a good question. I do not have a complete

answer to that, and I am not going to try to put Stephanie on the

spot to come up with an answer either. It is in the definition of

emergency.

Mr. KALIFF. Well, I do, too.

Senator NELSON. I mean, in terms of a particular point in time,

it is looked at as though it is a flood, it is a hurricane—it is this,

it is that—as opposed to something that is over a longer period of

time, but it is no less devastating. It happened over a longer period

of time.

Mr. KALIFF. I would hope that their resources could be made

available to this problem.

Senator NELSON. You raise a good point. We will look into that.

Thank you.

Yes? If you could, for the record—and we have cards now—help

me by stating your name.

Mr. RICHARDSON. Charles Richardson, Hastings, Nebraska.

Senator NELSON. Yes. Thank you.

Mr. RICHARDSON. There is really a fearsome reality here that has

simply not been mentioned, and it astonishes me. It has been

known for at least 15 years that if we continue to pump carbon dioxide into the atmosphere, we would have worse droughts, big

floods, hot summers, mild winters, bigger winds. This has been

clearly known.

Our governments have been totally negligent on this throughout—over the course of this 15 years, and certainly over the last

years. Our current President has made a firm commitment to do

absolutely nothing.

Our carbon dioxide greenhouses continue to increase the consequences that we are now seeing were fully predicted. Farmers deserve all possible help. They have been betrayed by the governments.

Senator NELSON. Well, thank you very much. I suspect that that

might be somewhat controversial, as you understand, but I appreciate the fact that you have stated it for the record. I appreciate

that. Thank you.

56

Mr. RICHARDSON. The President’s administration has acknowledged it.

Senator NELSON. Thank you.

Well, I want to thank everybody for your participation here

today, those who were on the various panels, as well as those who

have participated by serving in the audience. To also suggest to

you that I hope that we can take what we have been able to put

together here at this hearing back to Washington to develop a consensus among our colleagues and a coalition and move forward on

getting the quickest possible resolution of this issue, which means

to get drought disaster aid relief back to the States that require it

as quickly as we can possibly do it.

It is clear that there is a strong concern about anything that

would delay the process, and it is also clear that we do not have

an option here. This is not about optional spending. We need to

move as quickly as we would if we had a flood or a hurricane or

some other kind of natural disaster.

I hope that we are able to build that case, convince our colleagues, and move forward on this, and to partner with the White

House to be able to help agriculture respond to the challenges of

the day, but also to preserve agriculture for the future.

Otherwise, we recognize the dire consequences to communities

and to our State. If we lose agriculture, this will not be Nebraska

anymore.

I hope that that is where we are heading, and we are going—I

know that is where we are heading, and I hope that we are going

to be successful in doing that.

I thank you. Again, I thank Stephanie and Senator Harkin, who

would have enjoyed being here were it not for his requirements in

his State, and many of my colleagues sent their best regards and

have shown a great deal of interest in this as well.

Thank you. The hearing is adjourned.

[Whereupon, the committee was adjourned.]

(57)

A P P E N D I X

JULY 20, 2002

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